In the correlated random effects approach, the regression model includes _____.
A)time averages as separate explanatory variables
B)at least one dummy variable
C)more than one endogenous explanatory variable
D)an instrumental variable

Question

Quizplus · Accepted Answer

The correlated random effects approach includes time averages as separate explanatory variables in the regression model. This is to control for unobserved time-invariant heterogeneity across individuals or entities in the data. The other options (B, C, and D) are not necessarily included in the correlated random effects approach.

In the Correlated Random Effects Approach, the Regression Model Includes