Övrigt Flashcards
1
Q
What is multicollinearity and what test is used for it?
A
When several independent variables in a model are correlated. Perfect relationship between variables is the root cause of multicollinearity problems.
VIF test: no problem as long as VIF<10 for all variables. If >10, drop the variable, it is redundant
2
Q
What is homo- and heteroscedasticity?
A
Homo: homogeneity of variances. Equal variance between groups being compared.
V(error term) = sigma2(error term)
Heterscedasticity is the opposite: variance differs.
