Fixed Effects Model (LSDV) and Overfitting??

Posted by Molte on Dec 31, 2012; 3:11pm
URL: http://spssx-discussion.165.s1.nabble.com/Fixed-Effects-Model-LSDV-and-Overfitting-tp5717179.html

Hi,

I am currently in the end faze of writing my bachelor's thesis in political science where I use a panel data set to investigate the effects of corporate contribution bans on policy outcomes on state level. Since I don't have much statistical background to draw upon I've been forced to read up on panel data, how to model it and different problems as I've gone along.

Now I've encountered one problem which I don't know how to tackle and hopefully someone here will be able to offer some advice. My question is if my model is overfitted (a concept I just discovered). I first got suspicious due to the very high value of my models R-squared (0,766) despite the fact that I'm only using 4 predictor variables. The 732 degrees of freedom also appears very high to my untrained eye. Due to my use of LSDV I also have 62 dummy variables (the study includes 47 states and 17 time periods, resulting in 46+16 dummy variables) Could this have resulted in that my model now is too complex and that I should apply a bootstrap or another similar test?

I greatly appreciate all help and wish you all a happy new year.

Best,
A. Severin