B)Heteroskedasticity

1)Define homo- and heteroskedasticity in words.

2)Define homo- and heteroskedasticity in mathematical notation.

3)Illustrate homo- and heteroskedasticity on a graph.

4)What can cause heteroskedasticity? When are we likely to see it?

5)Which of our important assumptions are violated by heteroskedasticity, and what consequences does this have for bias/inconsistency and standard errors.

6)Explain in detail how we can test for heteroskedasticity, why those tests work, and how we interpret the results.

7)Explain the various ways that we can correct for heteroskedasticity

8)Explain the advantages and disadvantages of FGLS/WLS versus just using robust standard errors.