Testing for Ar(1) Serial Correlation(continued) o An alternative is the Durbin-Watson DW) statistic, which is calculated by many pacKages If the dw statistic is around 2. then we can reject serial correlation, while if it is significantly <2 we cannot reject Critical values are difficult to calculate making the t test easier to work with Economics 20- Prof andersonEconomics 20 - Prof. Anderson 3 Testing for AR(1) Serial Correlation (continued) An alternative is the Durbin-Watson (DW) statistic, which is calculated by many packages If the DW statistic is around 2, then we can reject serial correlation, while if it is significantly < 2 we cannot reject Critical values are difficult to calculate, making the t test easier to work with