Multiple Choice
How do you test for endogenous regressors,or correlation between the error term and any regressor in a random effects model?
A) estimate coefficients with RE and FE,then perform a Hausman test of equality
B) estimate the model capturing estimated residuals,then regress residuals on all regressors and perform an F-test
C) estimate RE model capturing estimated residuals,then estimate coefficients of correlation with each regressor
D) estimate RE and FE models and perform an F test on each model individually.If the difference between the F statistics is significant,conclude endogeneity.
Correct Answer:
Verified
Correct Answer:
Verified
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