The Empirical Trap of Sign Reversals with Equality Restrictions

Stephen E. Haynes ()
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Stephen E. Haynes: Department of Economics, University of Oregon

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: This note explores the insidious empirical trap posed by two common equality restrictions in regression analysis. The trap is that restricted coefficients can lie outside the interval of unrestricted coefficients and even reverse sign when negatively correlated regressors are added to one another or when positively correlated regressors are subtracted from one another.

Keywords: Equality restrictions; Sign reversals; Invalid restrictions (search for similar items in EconPapers)
JEL-codes: C12 C52 (search for similar items in EconPapers)
Pages: 11
Date: 2005-01-15
New Economics Papers: this item is included in nep-ecm
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Persistent link: https://EconPapers.repec.org/RePEc:ore:uoecwp:2005-8

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