(3) Cobweb phenomenon The agriculture commodities often reflects the Cobweb phenomenon, where supply reacts to price with a lag of one time period because supply decisions take time to implement, the beginning of this years planting of crops farmers are influenced by the price prevailing last year Supply B+B2P++p
（3）Cobweb phenomenon The agriculture commodities often reflects the Cobweb phenomenon, where supply reacts to price with a lag of one time period because supply decisions take time to implement, the beginning of this year’s planting of crops farmers are influenced by the price prevailing last year Supplyt=B1+B2Pt-1+μt
(4) Data Manipulation Data smoothness can itself lead to a systematic pattern in the disturbances thereby inducing autocorrelation
（4）Data Manipulation Data smoothness can itself lead to a systematic pattern in the disturbances, thereby inducing autocorrelation
12.2 Consequences of autocorrelation (1The OlS estimators are linear and unbiased (2)The OLS estimators are not efficient The error variance of ols estimators is a biased estimator of the true o The estimated variances sometimes underestimate true variances and standard errors, thereby inflating t values (3) The t and f tests are not generally reliable (4) The conventionally computed R2 may be an unreliable measure of true r (5) Variances and standard errors of forecast may also be inefficient
12.2 Consequences of autocorrelation (1)The OLS estimators are linear and unbiased (2)The OLS estimators are not efficient The error variance of OLS estimators is a biased estimator of the true σ2 The estimated variances sometimes underestimate true variances and standard errors, thereby inflating t values （3）The t and F tests are not generally reliable. （4）The conventionally computed R2 may be an unreliable measure of true R2 . （5）Variances and standard errors of forecast may also be inefficient
12.3 Detecting Autocorrelation Because the true u are unobservable. we have to rely on the es obtained from the standard ols procedure to learnsomething about the presence, or lack thereof, of autocorrelation
12.3 Detecting Autocorrelation Because the true ui are unobservable, we have to rely on the et s obtained from the standard OLS procedure to “learn”something about the presence, or lack thereof, of autocorrelation