# #StackBounty: #regression #econometrics #regression-coefficients #fixed-effects-model Question about fixed effects, and state-by -time …

### Bounty: 50

I have seen papers at the US level where they include county fixed effects, and state-by-year fixed effects, i.e.:

$$y_{c,t}$$ = $$betax_{c,t}$$ + $$lambda_c$$ + $$mu_{s,t}$$ + $$eta_{c,t}$$

where c indexes county, t time, and s states, opposed to a more typical county and just year fixed effect. $$lambda_c$$ are county fixed effects, $$mu_{s,t}$$ are state-year fixed effects, and $$eta_{c,t}$$ is the error term. They referred to this as ‘comparing counties within states’. How does this accomplish that goal? so is this estimator of $$beta$$ than estimating $$dy/dx$$ within a state, and then averaging the state effects over each state?

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