Question 4 Residual sum of squares (x1011) Regression Occupational Regular Total Separate RSS, = 3.49 RSS, = 1.22 4.71 Pooled 5.55 3.36 RSSp = 8.91 The table shows the residual sum of squares for a pooled regression and separate regression for dummy variables. Carry out a chow test for the two groups. There is only one explanatory variable and 74observations. [5marks] b. What are the consequences of running a model when the variance of the disturbance term is not constant? And how can you remedy it? (5marks) c. Outline the Goldfeld-Quandt test for heteroscedasticity and explain when this is a sensible Jest to use. (10marks) Question 4 Residual sum of squares (x1011) Regression Occupational Regular Total Separate RSS, = 3.49 RSS, = 1.22 4.71 Pooled 5.55 3.36 RSSp = 8.91 The table shows the residual sum of squares for a pooled regression and separate regression for dummy variables. Carry out a chow test for the two groups. There is only one explanatory variable and 74observations. [5marks] b. What are the consequences of running a model when the variance of the disturbance term is not constant? And how can you remedy it? (5marks) c. Outline the Goldfeld-Quandt test for heteroscedasticity and explain when this is a sensible Jest to use. (10marks)