In the previous blogs, heteroskedasticity, serial correlation & multicollinearity were discussed.
These events result in errors as it relates to hypothesis testing. I thought it worthwhile to summarize the types of errors.
Type of violations Type of Error Meaning of Error
Heteroskedasticity Type 1 Error Rejection of the null hypothesis, when it is true
Serial Correlation Type 1 Error Rejection of the null hypothesis, when it is true
Multicollinearity Type 2 Error Failure to reject the null hypothesis when it is actually false
These events result in errors as it relates to hypothesis testing. I thought it worthwhile to summarize the types of errors.
Type of violations Type of Error Meaning of Error
Heteroskedasticity Type 1 Error Rejection of the null hypothesis, when it is true
Serial Correlation Type 1 Error Rejection of the null hypothesis, when it is true
Multicollinearity Type 2 Error Failure to reject the null hypothesis when it is actually false
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