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(a) How is the presence of heteroscedasticity tested? (b) How can heteroscedasticity be corrected?
Gives the consumption expenditures C and disposable income Yd for 30 families.
(a) Regress C on Yd for the entire sample and test for heteroscedasticity.
(b) Correct for heteroscedasticity if it is found in part a.
Table Consumption and Income Data for 30 Families (in U.S. Dollars)
Consumption
Income
10,600
10,800
11,100
12,000
11,400
11,700
12,100
13,000
12,300
12,600
13,200
14,000
13,300
13,600
15,000
13,800
14,200
16,000
14,400
14,900
15,300
17,000
15,700
16,400
18,000
15,900
16,500
16,900
19,000
17,500
18,100
20,000
17,200
17,800
18,500
21,000
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