Theil and Nagar have suggested that in small samples instead of estimating ρ as (1 - d/2), it be estimated as
ρˆ =((1 - d/2) + k2/n2)/1-n2/k2
where n = total number of observations, d = Durbin-Watson d, and k = number of coef?cients (including the intercept) to be estimated.
Show that for large n, this estimate of ρ is equal to the one obtained by the simpler formula (1 - d/2).