I am an undergraduate student working on environmental economics research. The econometric specification I am using is the following:
ln(Per.Capita.Dollars) = ln(Per.Capita.Dollars.lag) + Average.Annual.Temp + Average.Annual.Prcp + Average.Annual.Temp.lag + Average.Annual.Prcp.lag + factor(Year) + factor(Unique.County)
Temp = Temperature; Prcp = Precipitation; Unique.County = Unique US county
.lag is indicating a new 1 year lagged variable.
If I am aggregating my weather variables annually does it still make sense to have a Year fixed effect (I know it does when using a smaller time step)? Similarly I will be aggregating over counties to a national scale (looking at just the US), will it make sense to have some sort of national fixed effect?