Collinearity

Collinearity is different from the other problems discussed in this monograph in two related respects: (1) Except in exceptional circumstances (explained below), collinearity is fundamentally a problem with the data rather than with the specification of the regression model. (2) As a consequence, there is usually no satisfactory solution for a true collinearity problem.

As mentioned in Chapter 2, when there is a perfect linear relationship among the regressors ...

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