The second step in the Breusch-Pagan test is to regress the
A)residuals on the independent variables from the original OLS regression.
B)squared residuals on the residuals from the original OLS regression.
C)squared residuals on the independent variables from the original OLS regression.
D)residuals on the squared residuals from the original OLS regression.

Question

Quizplus · Accepted Answer

The second step in the Breusch-Pagan test involves regressing the squared residuals on the independent variables from the original OLS regression. This step tests whether there is a significant relationship between the variance of the residuals and the independent variables, which would indicate heteroscedasticity in the model. Therefore, the correct choice is C.

The Second Step in the Breusch-Pagan Test Is to Regress