b. Conduct the Durbin Watson test. Provide the formula, report your numerical re

Question

b. Conduct the Durbin Watson test. Provide the formula, report your numerical results, and provide a conclusion. (5 points) library (lm test) dw test (X soccer.balls sold per.thousand. people Price Ranking US. team alternat Durbin-Watson test data X. soccer.balls.sold.per .thousand people Price Ranking.of. US team DW 0.97336, p-value 4.022e-05 alternative hypothesis: true autocorrelation is greater than 0 c. Conduct the Lagrange Multiplier test. Explain the steps you are taking, report your output, and provide the conclusion. (5 points) bgtest(X soccer balls. sold.per.thousand. people Price Ranking of US. team, data Dat Breusch-Godfrey test for serial correlation of order up to 1 data soccer. balls. sold. per.thousand. people Price Ranking.of .US. team LM test 13.072, df 1, p-value 0.0002998

Explanation / Answer

b. In R, the function dwtest() verifies if the residuals from a linear model are correlated or not:

As the p value (4.022e-05) is less than 0.05 one can reject the null and conclude that the residuals are autocorrelated.

c. In R, the function bgtest() verifies if there is higher-order serial correlation or not:

As the p value (0.0002998) is less than 0.05 one can reject the null and conclude that there is higher-order serial correlation among residuals.

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