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1. Multicollinearity

a. Why is multicollinearity considered a "sample-specidic" problem? Why is the assumption of " ceterius paribus" important to a correctly specified econometric model?

b. Describe two test for multicollinearity? what can you do to address the problem? is it worth fixing? why, why not?

c. You are looking at the output from EViews model and strongly suspect multicollinearity. Describe the evidence based only on the EViews estimation for this equation

d. Describe two ways to eliminate or reduce the effects of multicollinearity?

Business Management, Management Studies

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