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When successive residuals are positively autocorrelated then Durbin-Watson statistic will be ________. a. less than 2 b. greater than 2 c. 2 d. -1

Question

When successive residuals are positively autocorrelated then Durbin-Watson statistic will be ________.

a.
less than 2

b.
greater than 2

c.
2

d.
-1

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Solution

The answer is a. less than 2.

Here's why: The Durbin-Watson statistic is a test statistic used to detect the presence of autocorrelation (a relationship between values separated from each other by a given time lag) in the residuals (prediction errors) from a regression analysis.

The Durbin-Watson statistic ranges in value from 0 to 4. A value of 2 means that there is no autocorrelation in the sample. Values from 0 to less than 2 indicate positive autocorrelation and values from more than 2 to 4 indicate negative autocorrelation.

So, when successive residuals are positively autocorrelated, the Durbin-Watson statistic will be less than 2.

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