How Do You Test for Endogenous Regressors,or Correlation Between the Error

question 18

Multiple Choice

How do you test for endogenous regressors,or correlation between the error term and any regressor in a random effects model?

• A)estimate coefficients with RE and FE,then perform a Hausman test of equality
• B)estimate the model capturing estimated residuals,then regress residuals on all regressors and perform an F-test
• C)estimate RE model capturing estimated residuals,then estimate coefficients of correlation with each regressor
• D)estimate RE and FE models and perform an F test on each model individually.If the difference between the F statistics is significant,conclude endogeneity.

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