TOPIC 6: MODEL SELECTION PROCEDURE

1. 1. In panel data model selection procedure, there are ________ important questions to ask about the unobserved heterogeneity factor.

2. 2. If unobserved heterogeneity factor is present but not correlated with the regressors, _______ is the preferred model.

3. 3. If unobserved heterogeneity factor is present and correlated with the regressors, Fixed effects is the preferred model.

• TRUE

• FALSE

4. 4. ________ test is used determine the preferred model between Fixed effects and Random effects.

5. 5. To perform BP-LM test, "_______" command is run after the Random effects estimation command.