DW Statistic: Decision rule

CFA Level II
#1

Somehow quite confused about the decision rule. Could someone give a brief?

#2

If DW stat < DW Lower ==> reject, there is positive serial corr

DW lower < DW stat < DW upper ==> inclusive

DW upper < DW stat ==> do not reject, no evidence of positive serial corr.

#3

wondering what is the different with inconclusive with do not reject, both mean no evidence of positive serial correlation, isn’t it?

#4

You’d better take a look at Schweser 2011, they have a more detailed chart where we have d_u, d_l, 4-d_u, 4-d_l, like if DW > 4-d_l we have negative correlation.

#5

generally you’re safe to assume a DW stat around two equals no serial serial correlation, low DW - positive serial corr and DW significantly greater than two = negative serial corr. i’m terrible at quant but this general guideline has allowed me to answer most questions regarding Durbin.

#6

Everyone,

Good luck to all of us tomorrow, don’t forget: time management is the key to success.

#7

Everyone,

Good luck to all of us tomorrow, don’t forget: time management is the key to success.

#8

Everyone,

Good luck to all of us tomorrow, don’t forget: time management is the key to success.

#9

cvv