Question: (a) Explain how one can secure statistical adequacy in practice by employing particular strategies in misspecification testing. (b) Explain why in practice one should combine

(a) Explain how one can secure statistical adequacy in practice by employing particular strategies in misspecification testing.

(b) Explain why in practice one should combine non-parametric (omnibus) with parametric directional M-S tests with a view to maximizing the breadth and length of the probing away from the statistical model being validated.

(c) Explain why rejecting the null using a less powerful M-S test provides better evidence for the presence of the departure than using a more powerful test.

(d) Explain intuitively the two auxiliary regressions used to test the statistical adequacy of the simple Normal model. Why do joint M-S tests have a distinct advantage over single assumption tests.

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