Discuss multicollinearity and state when it is necessary to correct this econometric problem. How the presence of multicollinearity in a regression can be revealed by examining the regression printout and the correlation matrix of the variables. What causes multicollinearity? What are the consequences of multicollinearity? Why must econometricians be concerned? Once evidence is found for the presence of multicollinearity in the regression what remedies are suggested to correct for multicollinearity?

Answer rating: 100% (QA)

Multicollinearity is an econometric problem that occurs when two or more predictors in a multiple regression model are highly correlated with one another Tolerance is a measure of how much the coeffic... View the full answer