If You Perform a Hausman Test on a Random Effects

question 19

Multiple Choice

If you perform a Hausman test on a random effects model and have a test statistic that exceeds your critical value,which of the following is not correct?

• A)at least one of the regressors in the RE model is endogenous
• B)none of the common coefficient estimates in the RE model will be significantly different in the FE model
• C)FE may be the preferred estimation technique
• D)this model may be better estimated using the Hausman-Taylor estimator

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