Which of the following is NOT a good reason for including lagged variables in a regression?
A) Slow response of the dependent variable to changes in the independent variables
B) Over-reactions of the dependent variables
C) The dependent variable is a centred moving average of the past 4 values of the series
D) The residuals of the model appear to be non-normal

Question

Quizplus · Accepted Answer

Including lagged variables in a regression model is primarily aimed at capturing dynamics such as slow responses, over-reactions, or moving average behaviors in the data. It does not directly address the issue of non-normal residuals, which might require different statistical techniques or transformations.

Which of the Following Is NOT a Good Reason for Including