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Suppose you are working with an econometric model and, after your first regression, you notice that the standard errors of your estimated coefficients ( s)

Suppose you are working with an econometric model and, after your first regression, you notice that the standard errors of your estimated coefficients ( s) do not look appropriate, appearing too low or too large. Based on this problem, answer the following questions:

  1. Give two possible violations of the Classical Assumptions that may have originated such a problem.
  2. Select one of your answers from (a) and explain the possible origin(s) of such a problem. Feel free to use equations and/or other mathematical expressions to help in your answer.
  3. Given that the regression returned either too low or too large standard errors, what is the main consequence associated with this fact to your overall results?
  4. What test(s) can you conduct to confirm/deny your suspicion? If you select statistical tests, make sure to indicate null and alternative hypotheses.
  5. In case a violation is confirmed, what are possible remedies to solve this problem? Explain

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