In grouped panel data, tiny groups are hard to estimate and standard information criteria can pick the wrong number of groups; this paper derives when estimation works and proposes modified criteria.
The proof closely follows that of Lemma S.4 of Bonhomme and Ma nresa (2015)
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K-Means Panel Data Clustering in the Presence of Small Groups
In grouped panel data, tiny groups are hard to estimate and standard information criteria can pick the wrong number of groups; this paper derives when estimation works and proposes modified criteria.