The first step of the Durbin-Watson test for the presence of autocorrelation is to estimate the model and determine
A)the current period residuals.
B)the residuals lagged one period.
C)the current period residuals and the residuals lagged one period.
D)the current period residuals,the residuals lagged one period,and the residuals lagged two periods.

Question

Quizplus · Accepted Answer

The first step of the Durbin-Watson test involves calculating the residuals of the model and determining the correlation between the current period residuals and the residuals lagged by one period. Therefore, the correct choice is C, which includes both the current period residuals and the residuals lagged one period. The residuals lagged two periods are not necessary for the first step of the test.

The First Step of the Durbin-Watson Test for the Presence