Suppose u_t is the error term for time period 't' in a time series regression model the explanatory variables are x_t = (x_t1,x_t2 …. ,x_tk).The assumption that the errors are contemporaneously homoskedastic implies that: A)Var(u_t|x_t)= √σ. B)Var(u_t|x_t)= ∞. C)Var(u_t|x_t)= σ². D)Var(u_t|x_t)= σ.

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Quizplus · Accepted Answer

Contemporaneous homoskedasticity implies that the variance of the error term given the explanatory variables is constant, denoted as σ².

Suppose Ut Is the Error Term for Time Period 'T

Suppose U_t Is the Error Term for Time Period 'T