The third step in the first iteration of the Cochrane-Orcutt method for AR(1)is to
A)use the estimate of $\hat { \rho }$ to adjust the dependent variable.
B)use the estimate of $\hat { \rho }$ to adjust the independent variables.
C)use the estimate of $\hat { \rho }$ to adjust the dependent variable and the independent variables.
D)use the estimate of $\hat { \rho } _ { 1 }$ and $\hat { \rho } _ { 2 }$ to adjust the dependent variable and the independent variables.

Question

Quizplus · Accepted Answer

In the Cochrane-Orcutt method, the third step involves using the estimate of $\hat{\rho}$ to adjust both the dependent and independent variables to correct for autocorrelation in the residuals.

The Third Step in the First Iteration of the Cochrane-Orcutt ρ^\hat { \rho }ρ^​

The Third Step in the First Iteration of the Cochrane-Orcutt $\hat { \rho }$