RESET suggests augmenting an existing model with the squares or the squares and higher powers of the
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RESET suggests augmenting an existing model with the squares or the squares and higher powers of the predictions \(\hat{y}_{i}\). For example, \(\left(\hat{y}_{i}^{2}\right)\) or \(\left(\hat{y}_{i}^{2}, \hat{y}_{i}^{3}\right)\) or \(\left(\hat{y}_{i}^{2}, \hat{y}_{i}^{3}, \hat{y}_{i}^{4}\right)\). What would happen if you augmented the model with the predictions \(\hat{y}_{i}\) ?
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Related Book For
Principles Of Econometrics
ISBN: 9781118452271
5th Edition
Authors: R Carter Hill, William E Griffiths, Guay C Lim
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