Question: Q4. [10] Based on the following output tables, write all the panel data regression models. Which is a better model, FEM or REM? Justify your

Q4. [10] Based on the following output tables,

Q4. [10] Based on the following output tables, write all the panel data regression models. Which is a better model, FEM or REM? Justify your answer. (300 words) Table # 2 Dependent Variable: PAYOUT Method: Panel EGLS (Cross-section random effects) Periods included: 10 Cross-sections included: 30 Total panel (unbalanced) observations: 297 Variable Coefficient Std. Error t-Statistic Prob. GROWTH OPPORTUNITIES LIQUIDITY LEVERAGE 2.489234 8.607386 -0.131408 26.55794 0.803970 2.111391 0.116707 6.134726 3.096176 4.076643 -1.125957 4.329116 0.0022 0.0001 0.2611 0.0000 Effects Specification S.D. Rho Cross-section random Idiosyncratic random 23.14597 25.45762 0.4525 0.5475 Weighted Statistics R-squared Adjusted R-squared S.E. of regression F-statistic Prob(F-statistic) 0.089013 0.079685 25.62932 9.543004 0.000005 Mean dependent var S.D. dependent var Sum squared resid Durbin-Watson stat 14.43565 26.69547 192460.5 1.175268 Q4. [10] Based on the following output tables, write all the panel data regression models. Which is a better model, FEM or REM? Justify your answer. (300 words) Table # 2 Dependent Variable: PAYOUT Method: Panel EGLS (Cross-section random effects) Periods included: 10 Cross-sections included: 30 Total panel (unbalanced) observations: 297 Variable Coefficient Std. Error t-Statistic Prob. GROWTH OPPORTUNITIES LIQUIDITY LEVERAGE 2.489234 8.607386 -0.131408 26.55794 0.803970 2.111391 0.116707 6.134726 3.096176 4.076643 -1.125957 4.329116 0.0022 0.0001 0.2611 0.0000 Effects Specification S.D. Rho Cross-section random Idiosyncratic random 23.14597 25.45762 0.4525 0.5475 Weighted Statistics R-squared Adjusted R-squared S.E. of regression F-statistic Prob(F-statistic) 0.089013 0.079685 25.62932 9.543004 0.000005 Mean dependent var S.D. dependent var Sum squared resid Durbin-Watson stat 14.43565 26.69547 192460.5 1.175268

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