In my field, a number of studies aggragated amount panel data (means data with station and time) and put them into a panel model to estimate regression coefficients. And then the model will apply to a large region for projecting future.

However, panel model actually restricted all stations to obey the same functional relationship. But to me, will this give some risks to the stations that did not obey the estimated relationships? I am thinking if panel model method may reject heterogeneity and exaggerate homogeneity.

If it is true, is it OK if the fitted model was used to apply to a large region?

Any idea is welcomed. THANKS.