Consider the special panel case where T = 2. If some of the omitted variables, which you hope to capture in the changes analysis, in fact change over time, then the estimator on the included change regressor
A)will be unbiased only when allowing for heteroskedastic-robust standard errors.
B)may still be unbiased.
C)will only be unbiased in large samples.
D)will always be unbiased.

Question

Quizplus · Accepted Answer

If some of the omitted variables change over time, the included change regressor may still be unbiased. However, the validity of this assumption depends on the nature and extent of the omitted variable bias. Therefore, the answer is B. The other options are not necessarily true in this case.

Consider the Special Panel Case Where T = 2