In the presence of serial correlation:
A)estimated standard errors remain valid.
B)estimated test statistics remain valid.
C)estimated OLS values are not BLUE.
D)estimated variance does not differ from the case of no serial correlation.

Question

Quizplus · Accepted Answer

In the presence of serial correlation, OLS estimates are not BLUE (Best Linear Unbiased Estimators) because they violate the Gauss-Markov assumptions. This means that there is bias in the OLS estimators, they are no longer efficient, and their variances are biased. However, the estimated standard errors and test statistics remain valid in the presence of serial correlation.

In the Presence of Serial Correlation