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ON
MULTICOLINEARITY
DUSHYANT
2018MBA011
MULTICOLLINEARITY
Constraints
on the Statistical
Data An over
model or in model
collection
method
the determine
population specificati
employed d model
being on
sampled.
CONSEQUENCES OF MULTICOLLINEARITY
CONSEQUENCES OF MULTICOLLINEARITY
VIF j C jj (1 R 2j ) 1
• VIFS > 5 TO 10 ARE CONSIDERED SIGNIFICANT. THE
REGRESSORS THAT HAVE HIGH VIFS PROBABLY HAVE
POORLY ESTIMATED REGRESSION COEFFICIENTS
DETECTION OF
MULTICOLLINEARITY
• Multicollinearity cannot be tested; only the degree of
multicollinearity can be detected.