ABSTRACT
Econometric techniques are used to estimate economic models, which ultimately allow us to explain how various variables affect some outcome of interest or to forecast future events. The OLS technique or estimator is the most popular method of performing regression analysis and estimating econometric models because, in standard situations it produces optimal results. The proof that OLS generates the best results is known as the Gauss-Markov theorem, but the proof requires several assumptions. These assumptions are known as the Classical Linear Regression Model (CLRM) assumptions. Any violation of the assumption of homoscedasticity i.e., no constant variance of error term for all values of Xi, is known appropriately as Heteroscedasticity or Unequal spread or Unequal variance.
