Fixed Effects vs. Random Effects

While debates persist, how fixed- and random-effect estimators differ and what they seek to accomplish, however, remain somewhat muddled in the various empirical literatures. A recent discussion on StataList, however, provides a rare moment of clarity (here) by nudging us to think about fixed- and-random effects as involving different tradeoffs (or preferences) between consistency and efficiency. As one commentator helpfully notes:

"The -fe- estimator is always consistent but inefficient if -re- is the way to go.
 The -re- estimator is inconsistent if -fe- is the way to go."