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Consider the model, Yt = B0 + B1 X1,t + B1 X2,t + Ut, and this...

Consider the model, Yt = B0 + B1 X1,t + B1 X2,t + Ut, and this is estimated using OLS with 350 observations. However, it is suspected autocorrelation is present. You compute the DW statistic as 0.891. The critical values for this model are: dL = 1.741 and dU = 1.764. What is your decision?

  • A.

    Reject the null.

  • B.

    Fail to reject the null.

  • C. Undetermined or inconclusive.

math   Statistics-And-Probability   
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Answer #1

the null and alternative hypothesis is

Ho: there is no autocorrelation present

Ha: there is autocorrelation

the DW statistic (d) = 0.891

The critical values for this model are: dL = 1.741 and dU = 1.764

since d < dL

so we reject Ho

Option A is true

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