**Durbin Watson Statistic, **

### Definition of Durbin Watson Statistic:

A number which determines whether there is autocorrelation in the residuals of a time series regression. The statistic ranges from 0 to 4 with 0 indicating positive autocorrelation and 4 indicating negative correlation. A value of 2 indicates no auto correlation in the sample. The formula is expressed as:

d=(sum from t=2 to t=T of: (et-et-1)2/(sum from t=1 to t=T of: et2)

where the series of et are the residuals from a regression.

Meaning of Durbin Watson Statistic & Durbin Watson Statistic Definition