Hyperbolic Transformation and Average Elasticity in the Framework of the Fixed Effects Logit Model

Yoshitsugu Kitazawa

Faculty of Economics, Kyushu Sangyo University, Fukuoka, Japan.

DOI: 10.4236/tel.[phone]                

Abstract

In this paper, a simple transformation is proposed for the fixed effects logit model, which constructs some valid moment conditions including the first-order condition for one of the conditional MLE proposed by Chamberlain (1980) [1]. Some Monte Carlo experiments are carried out for the GMM estimator based on the transformation. In addition, the average elasticity of the logit probability with respect to the exponential function of explanatory variable is proposed in the framework of the fixed effects logit model, which is computable without the fixed effects.

Keywords

Fixed Effects Logit; Conditional Logit Estimator; Hyperbolic Transformation; Moment Conditions; GMM; Monte Carlo Experiments; Average Elasticity

Conflicts of Interest

The authors declare no conflicts of interest.

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