Quarterly figures for e-commerce retail sales were obtained from the first quart

Question

Quarterly figures for e-commerce retail sales were obtained from the first quarter of 2001 through the fourth quarter of 2010. A regression model was estimated to describe the trend in e-commerce retail sales over time. The Durbin Watson statistic was calculated as 1.828. Using a = .01 we can conclude that there is: A) an inconclusive test. B) no evidence of positive autocorrelation. C) no evidence of negative autocorrelation. D) evidence of positive autocorrelation. E) evidence of negative autocorrelation.

Explanation / Answer

During Watson statistics always lies within 0 to 4

DW stat=2 means no autocorrelation

DW stat<2 means positive autocorrelation

DW stat>2 means negative autocorrelation

Here DW stat=1.828

i.e DW stat<2 means evidence of positive autocorrelation.

Answer is D. Evidence of positive autocorrelation

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