The Weighted Least Squares (WLS) method is a special form of Generalized Least Squares estimation. In this method, the original model is transformed so that the variance of residuals becomes…
The Goldfeld Quandt Test is used to detect the presence of heteroscedasticity in a regression model. This test was introduced by economists Arthur Goldfeld and Richard Quandt in the 1960s.…
The Breusch Pagan test for heteroscedasticity is sometimes also referred to as the BPG or Breusch Pagan Godfrey test. It is one of the most widely known tests for detecting…
The White test is one of the most commonly used statistical methods of detecting heteroscedasticity. It focuses on analysing the residuals from regression models to check for heteroscedasticity. Furthermore, the…
Heteroscedasticity is a situation where the variance of residuals is non-constant. Hence, it violates one of the assumptions of Ordinary Least Squares (OLS) which states that the residuals are homoscedastic…
After estimating Ordinary Least Squares or OLS in Rstudio, we must ensure that the model is a good fit. The model must satisfy the assumptions of OLS including heteroscedasticity, no…
