Dependent variable and prtystra, democa, log(expenda), and

 Estimate a model with voteA as the dependent variable and prtystrAdemocA, log(expendA), and log(expendB) as independent variables. Obtain the OLS re-

siduals, uˆi, and regress these on all of the independent variables. Explain why you obtain R2 5 0.

(ii)     Now, compute the Breusch-Pagan test for heteroskedasticity. Use the Fstatistic version and report the p-value.

(iii)    Compute the special case of the White test for heteroskedasticity, again using the

statistic form. How strong is the evidence for heteroskedasticity now?

 

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