Ans: D) you should not use time fixed effects since beer taxes are the same at a point in time across states.
Consider the regression example from your textbook, which estimates the effect of beer taxes on fatality rates across the 48 contiguous U.S. states. If beer taxes were set nationally by the federal government rather than by the states, then
A) it would not make sense to use state fixed effect.
B) you can test state fixed effects using homoskedastic-only standard errors.
C) the OLS estimator will be biased.
D) you should not use time fixed effects since beer taxes are the same at a point in time across states.
Economics
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