Question

The book Small Data Sets reports on an article by Kadiyala, “Testing for the ­Independence of Regression Disturbances” [Econometrica (1970) 38: 97– 117]. This article contains ­information on ice cream consumption over 30 4- week periods from March through July. The ­researchers were interested in determining what explanatory variables impacted the level of ­consumption. The variables considered in the study are
y, ice cream consumption, pints per capita……… x1, price of ice cream, $ per pint
x2, weekly family income, $............................................. x3, mean temperature, ° F
a. Fit the model y = β0 + β1x1 + β2x2 + b3x3 + ɛ to the ice cream data. Is there evidence in the residual plots of serial correlation?
b. Perform a Durbin– Watson test for serial correlation. Does the test confirm your observations from the residual plots?


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  • CreatedNovember 21, 2015
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