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The fixed effect (FE) estimation method in applied econometrics is used to control for unobserved heterogeneity when this heterogeneity is constant over time but varies across entities, such as individuals, firms, or countries. The main idea is to remove the effect of time-invariant characteristics so that the estimated coefficients reflect the impact of the explanatory variables more accurately. _____ __________ ______ _________ __________ _______ __________.
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