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The p-value from the Honda test is 0.03. The estimator with

time effects is being tested. Select the correct answer.

The

random effects

estimator is more suitable

than the fixed effects estimator bacause the random

effects estimator is inconsistent under the null hypothesis, which is rejected

using the 5% significance level.

❌

The pooled OLS estimator

is suitable

because there are no time effects under the null hypothesis, which

is not rejected using the 5% significance level.

❌

The estimator with time effects is suitable

because there

are no time effects under the null hypothesis, which is rejected at the 5%

significance level.

✅

The pooled OLS estimator is suitable

because the pooled OLS estimator is consistent under the null

hypothesis, which is not rejected using the 5% significance level.

❌

The fixed effects estimator is more suitable

than the radom

effects estimator bacause the fixed effects estimator is inconsistent under the

null hypothesis, which is rejected using the 5% significance level.

❌

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