Comparative Analysis of Heteroscedastic and Homoscedastic OLS Models
Journal Title: International Journal of Trend in Scientific Research and Development - Year 2020, Vol 4, Issue 6
Abstract
This study considered foreign direct investment FDI as response variable while, gross domestic product GDP , inflation and exchange rate were the predictor variables. The data were obtained from the Central Bank of Nigeria Statistical Bulletin spanning from 1970 to 2019. The study aimed at comparing heteroscedatic and homoscedastic OLS modes. Our findings revealed that the predictor variables in the heteroscedastic OLS model were not significant and were able to account for about 44 of the variation in the response variable. The diagnosis of the fitted regression model using BreuschPagan test showed that the assumption of homoscedasticity was violated. To address the problem of heteroscedasticity, all the variables were converted to log form to stabilise the variance. Our results from the now homoscedstic model revealed that all the predictor variables were significant and able to account for about 82 of the variation in the response variable. Therefore, our study established that when the assumption of homoscedasticity is violated, the model parameters become inefficient, the standard errors biased and the t statistics and the p values no more valid. On the other hand, this study evidently proved that homoscedastic OLS model provide better estimates than heteroscedastic OLS model. AkpensuenShiaondo Henry | Joel Simon | Alhaji Abdullahi Gwani | Joshua Hassan Jemna "Comparative Analysis of Heteroscedastic and Homoscedastic OLS Models" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-6 , October 2020, URL: https://www.ijtsrd.com/papers/ijtsrd33553.pdf Paper Url: https://www.ijtsrd.com/mathemetics/other/33553/comparative-analysis-of-heteroscedastic-and-homoscedastic-ols-models/akpensuenshiaondo-henry
Authors and Affiliations
AkpensuenShiaondo Henry
Keywords
Related Articles
- EP ID EP690673
- DOI -
- Views 103
- Downloads 0
Radiation effects on MHD Boundary Layer Flow Over A Moving Vertical Porous Plate with Heat Generation in the Presence of Chemically Reacting Non Newtonianfluid and Soret Effect
This paper is focused on the study of effect of heat and mass transfer on chemically reacting boundary layer flow of a Casson fluid over a porous stretching sheet in the differential equations are transformed by introduc...
Challenges Faced by Geography Teachers: Implications on Students' Academic Performance in Meme Division of the South West Region of Cameroon
This study investigates Challenges faced by Geography Teachers and their Impact on Students Academic Performance. Data were obtained through the use of questionnaires and interviews. The target population of this study c...
The Mythical Matrix of the Santals (A Key to entry into a tribe dispersed in many states of North India)
The Santals are an indigenous people. Whatever their origin, the scholars opine that they have inhabited India before the Aryan invasion. If they have lived in India for so long, why are they so unknown a people? Why hav...
A Robust Speaker Identification System
This paper is aimed to implement a robust speaker identification system. It is a software architecture which identifies the current talker out of a set of speakers. The system is emphasized on text-dependent speaker iden...
RP 166 Solving Some Special Standard Cubic Congruence of Composite Modulus modulo a Multiple of an Odd Prime
Here in this paper, ten special type of standard cubic congruence of composite modulus are studied for their solutions. It is found that each of the cubic congruence under consideration has a single solution. The solutio...