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# Consider {he fullnwing pint of residuals from a regression. This pattern suggests which of the felimv'ing problems?

1. The standard errors of the OLS coefficient estimates are incorrect and invalid when there is heteroscedasticity. True or False

2.True or False

A researcher is investigating whether government expenditure tends to crowd out investment and fits the following regression (standard errors in parentheses) using data from 30 countries:

I     =    18.10 - 1.07G + 0.36Y                R2 = 0.99

(7.79)   (0.14)    (0.02)

The researcher saves the residuals from this regression and regresses the squared residuals on G,Y, G2, Y2, and G*Y. The R2 = 0.9878 from this second regression. Test for the existence of heteroscedasticity at alpha=5%. True or False. There is heteroscedasticity.

TrueFalse

3.

3

Consider {he fullnwing pint of residuals from a regression. This pattern suggests which of the felimv'ing problems? (Z) A. speciﬁcaﬁnn bias
(Z) [3. heteroseedasticity
(Z) G. pusiﬁve serial mrrelaﬁm (Z) D. negative serial correlation

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