Which of the Following Is a Reason for Using the Correlated

Multiple Choice

Which of the following is a reason for using the correlated random effects approach?

A) It provides unbiased and consistent estimators when the idiosyncratic errors are serially correlated.
B) It provides unbiased and consistent estimators when the idiosyncratic errors are heteroskedastic.
C) It provides a more efficient estimate than the fixed effects approach.
D) It provides a way to include time-constant explanatory variables in a fixed effects analysis.