Dealing with heteroscedasticity

Click Quick and select Estimate Equation. A dialog box will appear as below:-

Type dependent variable (gdp) followed by constant (c) and independent variables (invest and unemp) in the space provided.

Click ok and the results will be as below:-

Click View and select Actual, Fitted Residual and direct to Residual Graph

The illustration of residual graph will be as below:-(Actual GDP-Predicted GDP)

Create a new series, residual3 that can capture the values of residuals

Genr residual3=resid

Click Quick and select Graph. A dialog box will appear as below:

Type gdp followed by residuals3 in the provided space

Click ok .A dialog box will appear as below:

Select Scatter in the specific box and choose Regression Line as a type of Fit Line, and then click ok.

The illustration of scatter plot will be shown as below:-

Click View and select Residual Tests, and then direct to Heteroskedasticity Tests.

A dialog box on Heteroskedasticity Tests will appear as below:-

Select Breusch-Pagan Godfrey.Click ok and the results will be as below:-

Null hypothesis : There is no heteroscedasticity (Homoscedasticity)

Alternative hypothesis: There is a heteroscedasticity

p-value=0.0020, p-value<0.05, Existence of heteroscedasticity

Click View and select Residual Tests, and then direct to Heteroskedasticity Tests.

A dialog box on Heteroskedasticity Tests will appear

Select White. Click Ok and the results will be as below:-

Null hypothesis : There is no heteroscedasticity (Homoscedasticity)

Alternative hypothesis: There is a heteroscedasticity

p-value=0.00, p-value<0.05, Existence of heteroscedasticity