Topic Test Quantitative Methods - Hamilton question 6. They do not provide upper and lower value. How to tell whether the model has serial correlation?
The Durbin Watson test stat is not close to 2
But should we use upper and lower value to test significance?
DW Test-statistic is approximately equal to 2(1-r) with r being the correlation of the errors for above 30 observations
from the formula, you can infer how big is the correlation when given the DW stat number. If it’s very close to 0, you can tell it has significant positive serial correlation. If it’s very close to 4, you can tell it has significant negative serial correlation.
The critical values are used for confirmation, but, you can definitely guess how big and the direction of the correlation is and make your call.