Business Statistics

Chapter 14 | Simple Linear Regression Analysis 481

When a researcher collects

data over a period of time,

there is a possibility that the

errors for a specific time peri-

od may be correlated with the

errors of another time period

because residuals at any given

time period may tend to be

similar to residuals at another

period of time. This is called

autocorrelation and the pres-

ence of autocorrelation in any

regression model raises ques-

tions about the validity of the

model.

The Durbin–Watson statistic

measures the degree of cor-

relation between each residual

and the residual of the immedi-

ately preceding time ...