The general approach to obtaining fully robust standard errors and test statistics in the context of panel data is known as _____.
A)confounding
B)differencing
C)clustering
D)attenuating

Question

Quizplus · Accepted Answer

Clustering is the appropriate approach for obtaining fully robust standard errors and test statistics in the context of panel data. Clustering allows for the correlation of observations within clusters (such as individuals) to be accounted for, which improves the accuracy of the estimates and reduces the risk of forgoing Type I errors. Confounding refers to a situation where the effects of two variables cannot be separated, differencing is used to eliminate fixed effects, and attenuating refers to a reduction in the magnitude of a coefficient due to measurement errors or other factors.

The General Approach to Obtaining Fully Robust Standard Errors and Test