Match List - I with List - II:

List - I                                                                                                List - II

(A) General Heteroscedasticity test                                                  (I) Ramsey
(B) General test for auto correlation                                                (II) Hausman
(C) Test of simultaneity                                                                   (III) White
(D) General test of specification error                                            (IV) Breusch-Godfrey

Correct option is C

The correct answer is: (C) (A)-(III), (B)-(IV), (C)-(II), (D)-(I)

Explanation:

• White test is used for detecting heteroscedasticity, a condition where the variance of error terms is not constant across observations.

• Breusch-Godfrey test is a general test for autocorrelation, especially useful in models with higher-order lags.

• Hausman test is applied in panel data models to test for simultaneity or endogeneity, mainly comparing fixed vs random effects.

• Ramsey RESET test is used to detect specification errors, particularly functional form misspecification in regression models.

  Additional Information:

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  • White: Associated with heteroscedasticity testing which assumes errors may have non-constant variance.

  • Breusch-Godfrey: Their test generalizes the Durbin-Watson test, applicable in models with lagged dependent variables.

  • Hausman: Distinguished between fixed effects and random effects estimators in panel data analysis.

  • Ramsey: Known for the RESET test to identify incorrect functional forms or omitted variables in regression.