Tests

Tests Statistics and Hypotheses

Null

1

Test for Normality:

Econometrics tool: Kolmogorov-Smirnov^a/Shapiro-Wilk test

Result: Chi²(6) = 4.21, and p-value = 0.191

Null hypothesis: Data is normally distributed

Decision: Assumption not violated and model fit for regression

Accepted

2.

Test for autocorrelation:

Econometrics tool: Breusch-Godfrey Test

Result: Chi²(6) = 2.13, and p-value = 0.324

Null hypothesis: Data is autocorrelated

Decision: Assumption not violated and model fit for regression

Rejected

3.

Test for Endogeneity:

Test for unobserved individual heterogeneity:

Econometrics tool: Hausman test

Result: Chi²(6) = 4.60, p-value = 0.4664

Null hypothesis: random Effect estimator

Decision: The most suitable model for regression is the random effect estimator

Accepted

4.

Test for heteroskedasticity:

Econometrics tool: Breusch-Pagan/Cook-Weisberg test

Result: BP = 3.34, and p-value = 0.274

The null is that it is homoscedastic

Decision: Confirmation of Random effect estimator as the most suitable model for regression

Accepted