Hi, I have a question, if my Hausman test is like below, which model should I use? Is it FE or RE?



Code:
. hausman fe re

                 ---- Coefficients ----
             |      (b)          (B)            (b-B)     sqrt(diag(V_b-V_B))
             |       fe           re         Difference       Std. err.
-------------+----------------------------------------------------------------
   div_yield |    .0171481     .0126373        .0045108         .051287
   firm_size |   -.1940015    -.3004789        .1064773        .3209853
------------------------------------------------------------------------------
                          b = Consistent under H0 and Ha; obtained from xtreg.
           B = Inconsistent under Ha, efficient under H0; obtained from xtreg.

Test of H0: Difference in coefficients not systematic

    chi2(2) = (b-B)'[(V_b-V_B)^(-1)](b-B)
            =   0.12
Prob > chi2 = 0.9432


I also did this command to rerun RE, then test for presence of u_i:

Code:
. quietly xtreg caar div_yield firm_size, re

. xttest0

Breusch and Pagan Lagrangian multiplier test for random effects

        caar[companyid,t] = Xb + u[companyid] + e[companyid,t]

        Estimated results:
                         |       Var     SD = sqrt(Var)
                ---------+-----------------------------
                    caar |   112.5604       10.60945
                       e |   107.0638       10.34717
                       u |   6.004459         2.4504

        Test: Var(u) = 0
                             chibar2(01) =     2.89
                          Prob > chibar2 =   0.0444