In panel data, the regression error
A)is likely to be correlated over time within an entity
B)should be calculated taking into account heteroskedasticity but not autocorrelation
C)only exists for the case of T 2
D)fits all of the three descriptions above

Question

In panel data, the regression error
A)is likely to be correlated over time within an entity
B)should be calculated taking into account heteroskedasticity but not autocorrelation
C)only exists for the case of T > 2
D)fits all of the three descriptions above

Quizplus · Accepted Answer

In panel data, the regression error is likely to be correlated over time within an entity. This is because panel data includes both cross-sectional and time-series data, so observations within the same entity are likely to be similar to each other over time. This creates a correlation in the error term within the same entity.

In Panel Data, the Regression Error