An Alternative to Using Simultaneous Equation Models with Panel Data

question 14

Multiple Choice

An alternative to using simultaneous equation models with panel data is:

• A)to use OLS estimates after first differencing the data.
• B)to use fixed effects transformation on the equations and then apply 2SLS.
• C)to convert the equations into reduced form and then apply feasible generalized least squares.
• D)to convert the equations into reduced form and then apply OLS.

---

Definitions:

Probability

A measure of the likelihood that an event will occur, often expressed as a fraction or percentage.

Independent Events

Events for which the occurrence of one does not affect the likelihood of occurrence of any of the others.

Public Transportation

A system of vehicles such as buses and trains that operate at regular times on fixed routes and are available for use by the public.

Auto Insurance

Insurance policy for cars, trucks, motorcycles, and other road vehicles, providing financial protection against physical damage, theft, and liability resulting from collisions.