Which of the Following Assumptions Is Needed for the Usual

question 5

Multiple Choice

Which of the following assumptions is needed for the usual standard errors to be valid when differencing with more than two time periods?

• A)The regression model exhibits heteroskedasticty.
• B)The differenced idiosyncratic error or u_it is uncorrelated over time.
• C)The unobserved factors affecting the dependent variable are time-constant.
• D)The regression model includes a lagged independent variable.

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