# Look at the following two graphs of residuals versus time, from a time series model. a) What

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## Question:

Look at the following two graphs of residuals versus time, from a time series model.

a) What kind of autocorrelation (positive or negative) do you see?

b) If the error ε_{t} at time t is modeled as, with u_{t} a white noise series, write down the limits of ρ for the errors of each of the above two graphs.

c) What test do you suggest for detecting autocorrelation of the errors in point B above?

d) If the error ε_{t} at time t is modeled as , what test do you recommend for detecting autocorrelation?

e) Mention ONLY one consequence of the autocorrelation problem.

f) Mention a remedy to the problem of Autocorrelation.

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