1.In estimating the regression in the previous problem (#3), you are concerned that the t-statistics may be inflated because of serial correlation.You compute the DW statistic at 0.664 for the regression

a.Based on the DW, what can you say about serial correlation between the residuals? Are they positively or negatively correlated? Or not correlated?

b.Compute the sample correlation between the regression residuals from one period and those from the previous period.

Perform a statistical test to see if there is serial correlation.If you are using the table in the textbook, assume that the critical values of the DW statistic for 202 observations are about 0.09 higher than the critical values for 100 observations