When Should the Hausman-Taylor Estimator Be Used

question 9

Multiple Choice

When should the Hausman-Taylor estimator be used?

• A)when a RE model has some endogenous regressors
• B)when FE is statistically insignificant
• C)when you do not have any information as to which regressors are endogenous
• D)when you want to estimate RE on a long,narrow data set

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Definitions:

Significance Level

A threshold chosen by the researcher which the p-value must be below in order to reject the null hypothesis.

Explanatory Variables

Variables in a statistical model that are used to predict or explain changes in the dependent variable.

Deaths

The occurrence of the permanent cessation of all vital functions in a living organism, marking the end of life.

Degrees of Freedom

Refers to the number of independent values or quantities that can vary in a statistical analysis without breaking any constraints.