It is advisable to use clustered standard errors in panel regressions because
A)without clustered standard errors, the OLS estimator is biased
B)hypothesis testing can proceed in a standard way even if there are few entities (n is small)
C)they are easier to calculate than homoskedasticity-only standard errors
D)the fixed effects estimator is asymptotically normally distributed when n is large

Question

Quizplus · Accepted Answer

The Answer of It is advisable to use clustered standard errors in panel regressions because
A)without clustered standard errors, the OLS estimator is biased
B)hypothesis testing can proceed in a standard way even if there are few entities (n is small)
C)they are easier to calculate than homoskedasticity-only standard errors
D)the fixed effects estimator is asymptotically normally distributed when n is large

It Is Advisable to Use Clustered Standard Errors in Panel