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Unformatted text preview: • Make sure your theoretical model and empirical models are consistent Second Correction : Find a proxy (a substitute) for the affected variable – another variable that measures the same thing as the original variables, but is less linearly related to the other • Example : Affected variable = interest rate . Replace the prime interest rate with the home mortgage interest rate. SEE THE INCLASS WORKSHEET ON MULTIPLE REGRESSION...
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 Spring '09
 Casler
 Regression Analysis, Interest Rates, Estimation theory, multicollinearity, estimators Major Effect

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