CONCEPTUAL DISCUSSION

Problem:If standard errors are off, then our statistical tests are off.

Discussion:

You'll be "fixing" your standard errors under the issue of nonspherical disturbances. As you may recall from class, our population regression function is given by:

\f\f\f\f\f\f\f\f\f\f\f\f\f\f\f\f\f\f\f