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.

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with fixed dividends.

Preemptive Right

The right of the stockholder to purchase additional shares of stock to maintain a proportionate interest when the corporation issues additional stock.

Shares

Shares represent ownership units in a corporation or financial asset, granting shareholders a portion of the corporation's assets and profits.

Participating

Involvement or engagement in a particular activity, process, or venture.