The accompanying table gives data
on percentage change per year for stock prices
(Y) and consumer price (X) for a
cross section of 20 countries.
(a) Plot the data in a scatter gram (Eviews)
(b) Regress Y on X and examine the residuals from this regression. What do you observe? (Eviews)
(c) Dropping the 5th observation
and do step b) again. Now examine the residuals from this
regression.
What do you observe? (Eviews)(Rats)
(d) If on the basis of the result
in (b) you conclude that there was heteroscedasticity in error
variance
but on the basis of the result in (c) you reverse your conclusion, What
general
conclusion
do you draw? (Suggested Answer)
