Serial correlation results in inefficient estimates of the structural parameters.

Name: Serial correlation results in inefficient estimates of the structural parameters.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Serial correlation violates the classical assumption of no autocorrelation in the error terms, leading to inefficient ordinary least squares (OLS) estimates because it inflates the variance of the regression coefficients, making them less reliable.

Serial Correlation Results in Inefficient Estimates of the Structural Parameters