If there is a positive correlation between the error terms from adjacent time-series observations,then the least squares estimate of the coefficient standard error is large.

Question

Quizplus · Accepted Answer

A positive correlation between the error terms from adjacent time-series observations indicates autocorrelation, which typically leads to the underestimation of the standard errors of the coefficient estimates in ordinary least squares regression, not an overestimation.

If There Is a Positive Correlation Between the Error Terms