Answered: Why can we not use first differences…

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Why can we not use first differences when we have independent cross sections in two years (as opposed to panel data)?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4A: Problems In Applying The Linear Regression Model

Section: Chapter Questions

Problem 5E

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Why can we not use first differences when we have independent cross sections in two years (as opposed to panel data)?

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