1.5 Version B. Consider a panel data regression model Yit = Bo + B1 xit + a; + eit where the unobserved heterogeneity a; is a fixed effect, and the idiosyncratic error eit is white noise. Is the random effect estimator of B1 consistent? Explain briefly.

1.5 Version B. Consider a panel data regression model Yit = Bo + B1 xit + a; + eit where the unobserved heterogeneity a; is a fixed effect, and the idiosyncratic error eit is white noise. Is the random effect estimator of B1 consistent? Explain briefly.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 1.4CE

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1.5 Version B. Consider a panel data regression model
Yit = Bo + B1 Xit + a; + eit
where the unobserved heterogeneity a; is a fixed effect, and the idiosyncratic
error eit is white noise. Is the random effect estimator of B1 consistent? Explain
briefly.

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