Consider the following regression model Y =B + BX + B 3 X + B4X3 +...
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Consider the following regression model Y₁ =B₁ + B₂X₁ + B 3 X₂ + B4X3 + U₁ Multicollinearity may be exist among the three explanatory variables used in this regression. The results of correlation matrix are given as follows. X1 X2 X3 i. ii. i11. Y 0.4 0.6 0.7 TABLE 2: Correlation matrix X2 X1 1.0 0.8 0.2 1.0 0.4 X3 1.0 From the above correlation matrix table, do these correlations provide sufficient evidence to conclude that multicollinearity occurs? Justify your answer (3 marks) Briefly explain TWO (2) effects onto the regression model if such problem exists. (4 marks) Explain TWO (2) other ways to detect multicollinearity.(4marks) Consider the following regression model Y₁ =B₁ + B₂X₁ + B 3 X₂ + B4X3 + U₁ Multicollinearity may be exist among the three explanatory variables used in this regression. The results of correlation matrix are given as follows. X1 X2 X3 i. ii. i11. Y 0.4 0.6 0.7 TABLE 2: Correlation matrix X2 X1 1.0 0.8 0.2 1.0 0.4 X3 1.0 From the above correlation matrix table, do these correlations provide sufficient evidence to conclude that multicollinearity occurs? Justify your answer (3 marks) Briefly explain TWO (2) effects onto the regression model if such problem exists. (4 marks) Explain TWO (2) other ways to detect multicollinearity.(4marks)
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i multiple correlation it refers to the presence of linear relationship ... View the full answer
Related Book For
Business Statistics a decision making approach
ISBN: 978-0133021844
9th edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry
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