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Basic Econometrics 5th Edition by Damodar Gujarati,Dawn Porter
Edition 5ISBN: 978-0073375779Basic Econometrics 5th Edition by Damodar Gujarati,Dawn Porter
Edition 5ISBN: 978-0073375779 Exercise 25
Critically evaluate the following statements:
c. "It is common for researchers to claim that multicollinearity is at work whenever their hypothesized signs are not found in the regression results, when variables that they know a priori to be important have insignificant t values, or when various regression results are changed substantively whenever an explanatory variable is deleted. Unfortunately, none of these conditions is either necessary or sufficient for the existence of collinearity, and furthermore none provides any useful suggestions as to what kind of extra information might be required to solve the estimation problem they present."
c. "It is common for researchers to claim that multicollinearity is at work whenever their hypothesized signs are not found in the regression results, when variables that they know a priori to be important have insignificant t values, or when various regression results are changed substantively whenever an explanatory variable is deleted. Unfortunately, none of these conditions is either necessary or sufficient for the existence of collinearity, and furthermore none provides any useful suggestions as to what kind of extra information might be required to solve the estimation problem they present."
Explanation
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As per the Classic Linear Regression Mod...
Basic Econometrics 5th Edition by Damodar Gujarati,Dawn Porter
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