Purchase Solution

Heteroskedasticity

Not what you're looking for?

Ask Custom Question

Multiplying an estimating equation by a correcting factor to correct heteroskedasticity may cause extra correlation to enter the model, which raises the R^2. This renders our ultimate regression results meaningless. True or false, or uncertain? Please provide an explanation.

Purchase this Solution
Solution Summary

Explains why a regression model where Heteroskedasticity is not satisfied is a useless model.

Solution Preview

The answer is false. A regression model is useless until all the regression assumptions are satisfied. So a regression model where Heteroskedasticity is not satisfied is a useless model. We must make necessary correcting adjustments to remove Heteroskedasticity.

Multiplying a regression ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

View More Free Quizzes
Related BrainMass Solutions

  • Heteroskedasticity

    2097 Heteroskedasticity Residual Plots I am attaching three different residual plots. I am trying to determine whether heteroskedasticity is present. I don't believe I see any pattern indicative of heteroskedasticity (nonconstant variance).

  • Residual Plot in Regression: Homoskedasticity v. Heteroskedasticity

    Heteroskedasticity-robust t-statistic. Implication of homoskedasticity, consequence of heteroskedasticity and remedy are discussed in the solution.

  • Heteroskedasticity

    am I suspecting to be true (i.e. define heteroskedasticity)?

  • Multiple regression

    White, "A Heteroskedasticity Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity", Econometrica, Vol. 48, pp 817-838, 1980.

  • Heteroskedasticity

    1539 Heteroskedasticity Consider the data found in the file, "gas10." You are interested in the effect that a gas tax has on petroleum consumption.

  • Interpreting Regression Analysis Output from EViews

    I think what you are generally asking is how to interpret output from a hypothesis test whether it is for heteroskedasticity, autocorrelation, or multicollinearity.

  • OLS and OLS (Robust Regression Analysis) with STATA

    Is there heteroskedasticity? How do you know? 4. Re-estimate the equation in 1 using robust standard errors.

  • Regression Analysis

    355981 Regression analysis In regression analysis, the existence of a significant pattern in successive values of the error term constitutes: a) heteroskedasticity b) autocorrelation c) multicollinearity d) nonlinearities e) a simultaneous

  • Interpreting integrity tests data on a regression analysis equation

    The data you collect would exhibit heteroskedasticity.

View More Related Solutions