DiagonisingModelProblems

# DiagonisingModelProblems - Heteroscedasticib DIAGNOSING...

• Notes
• 1

This preview shows page 1. Sign up to view the full content.

DIAGNOSING MODEL PROBLEMS Heteroscedasticib - a problem in which the variance of the residuals along a trend line is not constant. NOTE: the coefficient (~) .remains an unbiased Multicollineariw - a problem in which estimatornonetheless. two independent variables in a model are highly PROBLEMS caused by Heteroscedasticity: related. Multicollinearity is a sample 1} The coefficient (lJ) is not "efficient" or the phenomenon, not an estimation problem. "best" estimator. NOTE: If all of the independentvariablesarechecked, 2} The F-test is no longer reliable. andthe t-tests are significant,then multicollinearity 3}The t-tests are no longer reliable. shouldnotbea problem. CHECKINGfor Heteroscedasticity: PROBLEMS caused by Multicollinearity: 1} Check the scatterplot of residuals for fan 1} The estimated' coefficient (lJ) may no longer shaped patterns. be an unbiased estimators. 2} Goldfeld-Quandt test 2) Because of the strong interrelationships 3} Breusch-Pagan test between the independent variables, it is difficult 4}White test
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern