HETEROSCEDASTICITY: WHAT HAPPENS IF THE ERROR VARIANCE IS NONCONSTANT?
An important assumption of the classical linear regression model (Assumption 4) is that the disturbances u appearing in the population regression function are homoscedastic; that is, they all have the same variance. In this chapter we examine the validity of this assumption and find out what happens if this assumption is not fulfilled. As in Chapter 10, we seek answers to the following questions:
1. What is the nature of heteroscedasticity?
2. What are its consequences?
3. How does one detect it?
4. What are the remedial measures?
Was this article helpful?
Learning About The Rules Of The Rich And Wealthy Can Have Amazing Benefits For Your Life And Success. Discover the hidden rules and beat the rich at their own game. The general population has a love / hate kinship with riches. They resent those who have it, but spend their total lives attempting to get it for themselves. The reason an immense majority of individuals never accumulate a substantial savings is because they don't comprehend the nature of money or how it works.