A researcher estimates the following regression model: Yt = a + ßxt + Ut where yt and xt are both non-stationary variables. Which of the following statements is correct? a) This necessarily leads to spurious results b) The Durbin-Watson d statistic will be larger than the R² c) Including a time trend in the regression specification will provide meaningful results d) Differencing both variables may provide meaningful results but could lose some useful information

College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter1: Equations And Graphs
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13. A researcher estimates the following regression model:
Yt = a + ßxt + Ut
where yt and xt are both non-stationary variables. Which of the following statements is
correct?
a) This necessarily leads to spurious results
b) The Durbin-Watson d statistic will be larger than the R²
c) Including a time trend in the regression specification will provide meaningful results
d) Differencing both variables may provide meaningful results but could lose some useful
information
Transcribed Image Text:13. A researcher estimates the following regression model: Yt = a + ßxt + Ut where yt and xt are both non-stationary variables. Which of the following statements is correct? a) This necessarily leads to spurious results b) The Durbin-Watson d statistic will be larger than the R² c) Including a time trend in the regression specification will provide meaningful results d) Differencing both variables may provide meaningful results but could lose some useful information
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