Overview

multicollinearity


Show Summary Details

Quick Reference

In the context of multiple regression, strong correlations among the explanatory variables, which often result in large estimated standard errors and insignificant estimated coefficients. This is essentially a property of the sample and not a problem with the method of estimation, although sometimes ridge regression is used as a remedy. Perfect multicollinearity occurs when some of the explanatory variables are perfectly correlated, i.e. linearly dependent; in this case the redundant variable(s) must be removed from the regression.

Subjects: Economics.


Reference entries

See all related reference entries in Oxford Index »


Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.