# Heteroskedasticity

How would there be heteroskedasticity when the t-test is greater thant the critical value?

Exhibit 5.

EXHIBIT 5

UNIT ROOT TEST FOR NONSTATIONARITY AND THE TEST FOR HETEROSKEDASTICITY

Unit root test statistic −18.7402 Unit root test critical value at the 5% level of significance −2.89 Heteroskedasticity test statistic 2.016733 Heteroskedasticity test critical value at the 5% level of significance 1.96

Q. Based on the results reported in Exhibit 5, the AR(1) model is best described as having:

1. a unit root.
2. heteroskedasticity in the error term variance.
3. reliable standard errors.

The test for heter… is 2.016 while the critical value is 1.96.

2.016 > 1.96, therefore you reject the null hypoth and conclude that there is hetero…

but should not it be that when I reject the null hypothesis the model would be homoskedastic?

Your null hypothesis test is H0: no Heteroskedactisty so with your t value oof 2.016 which is higher than the 1.96 critical value you got a significant test here and reject that there is no Heterskedacitisty and conclude its existence.

Fundamental concepts of null hypothesis that should stick from L1.

The H0 is the opposite of what you’re trying to test. If you want to test if there is Heterskedacitisty , then the null is no Heterskedacitisty