Question
In: Economics
Q1: Explain what homoscedasticity is. Why is heteroscedasticity a violation of the Gauss-Markov Assumptions. i.e. explain...
Q1: Explain what homoscedasticity is. Why is heteroscedasticity a violation of the Gauss-Markov Assumptions.
i.e. explain why MLR.5 is necessary.
Solutions
Expert Solution
Homoscedasticity means that the error term also called as random error or the noise is same across all the values of the independent variable. This means that the variablity of the noicse does not change with the change in the value of the independednt variable.
Gauss markov assumptions talks about the normality and the homoscadasticity etc. But hetro scadasticity violates it because it states that the variablity of the variable differes with the different values of the Independednt variable. It willl be in a range. Which is not the same as stated in the homoscadasticity.
Gauss markov used MR5 which says that the error term is honoscadastic. It is necessary to keep it homoscadastic to predict the values. If the nise term also changes its variability then it is very difficult to predict the values. So it is important to maintain MR 5 that is homoscadisticity.
Rahul Sunny answered 2 years agoRelated Solutions
What does the Gauss-Markov theorem claim? Explain the assumptions needed for the Gauss-Markov Theorem.
Respond to the following question. What are the “Gauss-Markov” assumptions? Why are they important when using...
What are the Gauss Markov assumptions for the error term in a regression framework? Using these,...
A) What are the Gauss Markov assumptions for the error term in a regression framework? Using...
1. What are the five Classic Gauss-Markov Assumptions for simple linear regression?
Explain the Gauss-Markov assumptions required for unbiasedness and efficiency of the OLS estimator. Distinguish between the...
What is Gauss-Markov theorem? Why is it so important?
Prove that the OLS estimator is efficient provided the Gauss Markov assumptions hold.
For each of the Gauss-Markov Theorem assumptions (A0-A3), do the following:
For each of the Gauss-Markov Theorem assumptions (A0-A3), do the following: (a) State the assumption in...
- 1. Consider the following nuclides: &
- In general, teams can be described three ways. Name and define each.
- JAVASCRIPT: Please create an array of student names and another array of student grades. - Create...
- Topic - Construction: Structural, loads, tension 1.) Explain why pure tension members are the most efficient...
- Procter and Gamble (PG) paid an annual dividend of $ 1.62$1.62 in 2009. You expect PG...
- locate a recent case of online child pornography. Write a summary of the incident and describe...
- #Python 5. Write function called evaluate() that evaluates the following Python expressions or assignments as specified:...