Sumera Nawaz ECONOMICS   -   Econometrics

How to address heteroskedasticity in a regression model?

Heteroskedasticity can be addressed by applying robust standard errors, which provide consistent standard error estimates even when heteroskedasticity is present. This adjustment ensures that inference drawn from the regression coefficients remains valid despite the presence of non-constant variance in the error terms.
When is the use of a fixed-effects model preferable to a random-effects model in panel data analysis? What is the primary purpose of using Instrumental Variables (IV) in econometrics? Which test is commonly used to detect autocorrelation in the residuals of a regression model? How to address heteroskedasticity in a regression model? Why is multicollinearity a problem in multiple regression analysis?