Moderate# Visual Test for Serial Autocorrelation: Conclusions

EMETRC-AYL6FF

Suppose that you estimate an OLS regression and then plot the estimated residuals $\hat{\varepsilon}_t$ against the lag value of those residuals $\hat{\varepsilon}_{t-1}$ and observe that higher values of $\hat{\varepsilon}_t$ are associated with higher values of $\hat{\varepsilon}_{t-1}$.

What can you conclude?