cov (uit,uis Xit,Xis = 0 for t ≠ s means that
A)there is no perfect multicollinearity in the errors.
B)division of errors by regressors in different time periods is always zero.
C)there is no correlation over time in the residuals.
D)conditional on the regressors,the errors are uncorrelated over time.

Question

cov (uit,uis  Xit,Xis = 0 for t ≠ s means that
A)there is no perfect multicollinearity in the errors. 
B)division of errors by regressors in different time periods is always zero. 
C)there is no correlation over time in the residuals. 
D)conditional on the regressors,the errors are uncorrelated over time.

Quizplus · Accepted Answer

The statement cov (uit,uis 11eab146_bd92_e833_896a_591c592b2e29_TB2833_11 Xit,Xis = 0 for t ≠ s means that, given the values of the regressors, there is no correlation over time in the residuals. Option A refers to perfect multicollinearity among the regressors, which is a different issue. Option B is incorrect as it doesn't make sense to divide errors by regressors. Option C is not correct either, as the statement does not refer to the correlation among residuals at the same time point. Therefore, the correct option is D.

Cov (Uit,uis Xit,Xis = 0 for T ≠ S