Durbin-Watson Rejection Points

CFA Level II Quant
#1

Hi,

When we conduct the DW test, we fail to reject the null if DW

4-dl. Why 4-dl?

thanks your help!

#2

Because the DW statistic ranges from 0 to 4, and the critical values are symmetric about 2.

#3

You can find the demonstration in the CFAI book. It is basic algebra, but advanced statistic knowledge inside.

#4

Try entering r as +1 and -1 in the equation, DW=2(1-r), thats how you get 4 and 0. Number closer to zero 0 - positive SC and vice versa.