Question
State whether the following statements are true or false. Shortly explain your answer. I. Positive correlation between adjacent errors is common, especially in statistic and
State whether the following statements are true or false. Shortly explain your answer. I. Positive correlation between adjacent errors is common, especially in statistic and finite distributed lag models. II. The most unpopular model of serial correlation is the AR(1) model. III. Using the AR(1) model as a starting point, it is easy to test for the presence of AR(1) serial correlation using the OLS residuals. IV. An asymptotically valid t statistic is obtained by regressing the OLS residuals on the lagged residuals, assuming the regressors are strict exogenous and a homoskedasticity assumption holds.
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