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

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Definitions:

Significant Difference

A statistical measure indicating that the observed differences between two or more groups are not likely due to chance.

Standard Error

An estimate of the standard deviation of the sampling distribution of a statistic, often used in inferential statistics.

Sample Size

The number of observations or data points collected in a sample, which can influence the reliability and validity of statistical analyses.

Observed Z Value

The Z Score calculated based on sample data, representing the number of standard deviations a data point is from the mean.