a)
To find: The possibility of the cause of autocorrelation.
a)
Explanation of Solution
The causes of autocorrelation are:
1. Bias in the data
2. The data is not reliable there must be some change in the data.
b)
To find: The effect of autocorrelation.
b)
Explanation of Solution
The results are:
1. two or more independent variables are correlated, i.e., multicollinearity.
2. the function might be sometimes non-linear.
c)
To find: the affect of autocorrelation on the accuracy of
c)
Explanation of Solution
- autocorrelation might underestimate the true variance.
- The null hypothesis might be rejected although it is true.
d)
To find: remedial for autocorrelation removal
d)
Explanation of Solution
The remedy is to increase the number of observations, find the missing values and estimators although linear is not the efficient estimator.
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- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning