- Tests must be implemented as in class (compute the test statistic, compare to the critical value and apply the decision rule, conclude). All steps must be detailed.
- Name the variables in a relevant way
- Write this paragraph in the front page:
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Find the optimal model using one of the five methods Justify the choice of the method if relevant Comment and summarize the estimation results
. Tests for autocorrelation of order 1
Perform both tests:
Durbin Watson test
Breush Godfrey test
3. Tests for heteroscedasticity
Perform both tests covered in class:
- Goldfeld-Quandt Test
- White Test
- Correction in case of autocorrelation using the 1st method to estimate rho
- Correction if errors are heteroscedastic
- correct for either autocorrelation or heteroscedasticity based on your conclusions in sections 3 and 4
- apply a second selection method on your data
- apply a second selection method on your data
- provide a forecast interval for t = n+1
Present the final model and give comments (significance, size, and sign of the effects)
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