Q2 i (1) An econometrician suspects that the residuals of her model mightbe autocorrelated. Explain the steps involved in testing this theoryusing the Durbin–Watson (DW) test. (2) The econometrician...

(1) An econometrician suspects that the residuals of her model mightbe autocorrelated. Explain the steps involved in testing this theoryusing the Durbin–Watson (DW) test.

(2) The econometrician follows your guidancein part (b) andcalculates a value for the Durbin–Watson statistic of 0.95. The regression has 60 quarterly observations and three explanatory variables (plus a constant term). Perform the test. What is your conclusion?