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In this video tutorial, the speaker discusses using fixed effect method to account for both time and individual effects in panel data analysis. The panel regression equation is presented as alpha + lambda T + betaX + error term. The individual effect is denoted by alpha I and the time effect is denoted by lambda T. The speaker applies the fixed effect method using Grunfeld dataset and demonstrates the process in the video. The fixed effect method is used to capture both time and individual effects simultaneously in panel data analysis.