Question

The Chow test is based on two assumptions. You suspect that the assumption that the error variance is the same for the 2 periods, does not hold. The result being that the Chow test is not appropriate...

The Chow test is based on two assumptions. You suspect that the assumption that the error variance is the same for the 2 periods, does not hold. The result being that the Chow test is not appropriate to test for structural breaks in our data. Test if the assumption of equal error variance holds. (What is expected of me?)

0 0
Add a comment Improve this question Transcribed image text
Answer #1

The Chow test tells us whether the regression coefficients are different for split data sets. Basically, it tests whether one regression line or two separate regression lines best fit a split set of data.

There are two assumptions of Chow test:

1. Error variance is the same for the 2 periods

2. There exists a structural change in the data.

The question says that there do not exist a structural change in the data and you have to test whether the error variance is the same for 2 periods.

Add a comment
Know the answer?
Add Answer to:
The Chow test is based on two assumptions. You suspect that the assumption that the error variance is the same for the 2 periods, does not hold. The result being that the Chow test is not appropriate...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT