2. Graphical Examination of Residuals These residuals can be plotted against the observation to which they belong or against one or more of the explanatory variables or against y, the estimated emean value of y For example, we can plot erFs the residuals squared, against sales NITIATI
• 2. Graphical Examination of Residuals • These residuals can be plotted against the observation to which they belong or against one or more of the explanatory variables or against , the estimated mean value of . For example, we can plot , the residuals squared, againstsales. i ˆ i ˆ 2 i e
3. Park Test we can regress o 2 on one or more of the X variables ho2=B2+B2nX;+v;(14) Park suggests using ei as proxies for u he2=B2+B2hX;+V1(11.5) A
• 3. Park Test. • we can regress on one or more of the X variables. (11.4) • Park suggests using ei as proxies for ui . (11.5) 2 2 i i 2 i lnσ = B + B lnX + v 2 2 i i 2 i lne = B + B lnX + v 2 σ i