Question: 3. The econometric model is Y t =+ 1 Y t-1 + 2 Y t-2 +X t +U t Conduct LM test for serial correlation

3. The econometric model is Y t =+ 1 Y t-1 + 2 Y t-2 +X t +U t

Conduct LM test for serial correlation for this model by using appropriate steps.

4.Prepare the design of an Augmented Dickey Fuller Test. How do you determine the

optimum lag length against each variable? Explain.

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