Multicollinearity, Heteroscedasticity and Autocorrelation.pptx
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A brief idea regarding the topics of Econometrics
Transcript of Multicollinearity, Heteroscedasticity and Autocorrelation.pptx
Chapter 13: Heteroscedasticity: What happens if the error variance is nonconstant
Multicollinearity: What happens if explanatory variables are correlated?Multicollinearity: A situation where two or more variables can be highly linearly related.Perfect multicollinearity: Perfect collinearity exists when two variables are perfectly linearly related that is R2 = 1Imperfect multicollinearity: Imperfect or near collinearity exists when two variables are approximately linearly related that is R2