The Random Effects Approach _____

question 13

Multiple Choice

The random effects approach _____.

• A)cannot be used if the key explanatory variable is constant over time
• B)is preferred to pooled OLS because RE is generally more efficient
• C)is suitable if the Hausman test rejects the assumption that the unobserved effect is uncorrelated with the explanatory variables
• D)is more convincing than fixed effects for policy analysis using aggregate data