Les liaisons fallacieuses: quasi-colinéarité et « suppresseur classique », aide au développement et croissance

Jean-Bernard Chatelain and Kirsten Ralf

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This paper shows that a multiple regression with two highly correlated explanatory variables, both of them with a near zero correlation with the dependent variable may correspond to a spurious regression or to a homeostatic model, with estimates highly sensible to outliers. The regression method does not allow how to decide which one of the two models is relevant. Statistical significance of the (very high) parameters is easily obtained, as shown doing Monte Carlo simulations. An example is provided by the Burnside and Dollar [2000] article on aid, policies and growth

Keywords: Spurious regression; near-multicollinearity; classical suppressor; parameter inflation factor (PIF) (search for similar items in EconPapers)
JEL-codes: C12 C18 C52 F35 O47 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2012-02
New Economics Papers: this item is included in nep-ecm
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:12011

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