White test, Other Subject

What might be a problem with the White test in this application? What is a possible solution?

Answer: This test may have some problems when the number of regressors in the initial model is high. In these situation the cross-products of regressors may be omitted in the auxiliary model. When in the initial model there are dummy variables their squares are not included in the auxiliary regression to avoid multicollinearity problems.

Posted Date: 4/1/2013 5:15:12 AM | Location : United States







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