Effects in panel models "individual", "time" or "twoways" Panel estimators such the one implemented in the R package plm allow to estimate "individual", "time" or "twoways" effects.
See page 11.
When do I use which of the three possible specifications?
 A: The canonical two-way model is
$$
y_{it}=x_{it}'\beta+\alpha_i+\theta_t+\epsilon_{it}
$$
Here, the individual effect is $\alpha_i$, and $\theta_t$ is the time effect. It is a two-way model if both are present. Thus, $\alpha_i$ captures effects that are specific to some panel unit but constant over time, whereas $\theta_t$ captures effects that are specific to some time period but constant over panel units.
So, whether you need both will, as @Ben pointed out, depend on your research question. For example, if have a panel of firms, $\theta_t$ might represent business cycle effects, whereas $\alpha_i$ would contain firm specific effects that can be argued to be constant over time, such as the "culture" of the firm.
A: It depends on your research, in some cases time effects could solve the cross-sectional problem. An article that is very useful is "Estimating Standard Errors in Finance Panel
Data Sets: Comparing Approaches" by Mitchell A. Petersen, 2009.
In fact, twoways here means both individual and time effects, so it is just two specifications
hope this helps 
