You are given the accompanying data:
*Obtained from the regression Yt = £]0 + £]1Xt + Ut
(a) Verify that Durbin-Watson d = 0.4147 (Eviews)
(b) Is there positive serial correlation in the disturbances? (Suggested Answer)
(c) If so, estimate p by the
i)
Theil-Nagar method (Suggested
Answer)
ii)
Durbin two step procedure (Eviews)
iii)
Cochrane-Orcutt method (Eviews)
(d) Use the Theil-Nagar method to
transform the data and run the regression on the
transformed
data. (Eviews)(Rats)
(e) Does the regression estimated in (d) exhibit autocorrelation? If
so, how would you get rid of it?
(Suggested
Answer)
