| Violation | Problem | Detection | Remedy | |-----------|---------|-----------|--------| | Heteroscedasticity | Non-constant variance | Breusch-Pagan, White test | Robust SEs, WLS | | Autocorrelation | Correlated errors (time series) | Durbin-Watson test | Cochrane-Orcutt, HAC SEs | | Multicollinearity | High correlation among X’s | VIF (Variance Inflation Factor) | Drop variable, ridge regression | | Non-normality | Skewed errors | JB test | Large-n asymptotics |
Slides should illustrate how to incorporate qualitative variables (gender, race, seasonality) using intercept and slope dummies. The "dummy variable trap" must be explicitly warned against. basic econometrics gujarati ppt
This is where econometrics becomes inferential. A search for "basic econometrics gujarati ppt" often includes requests for "testing slides." | Violation | Problem | Detection | Remedy