HAC Standard Errors Should Be Used Because

question 45

Multiple Choice

HAC standard errors should be used because

• A)they are convenient simplifications of the heteroskedasticity-robust standard errors.
• B)conventional standard errors may result in misleading inference.
• C)they are easier to calculate than the heteroskedasticity-robust standard errors and yet still allow you to perform inference correctly.
• D)when there is a structural break, then conventional standard errors result in misleading inference.

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Definitions:

Abstract Ideas

Concepts that do not have a physical or concrete existence, dealing with thoughts or theories rather than tangible objects.

Scientific Method

The steps in a research process, including observation, hypothesis testing, analysis of data, and generalization.

Deductive Reasoning

A logical process in which a conclusion is based on the concordance of multiple premises that are generally assumed to be true.

Inductive Method

A reasoning method where several assumptions, considered true or mostly true, are merged to derive a particular outcome.