OMITTED VARIABLE BIAS AND DETECTION WITH RESET TEST IN REGRESSION ANALYSIS
Öz
In this paper, it is aimed to investigate the omitted variable bias, its importance, reasons, and consequences and to research the methods for dealing with omitted variable bias and RESET test which is a method for detecting omitted variable(s). A simulation was performed and three types of populations which varied depending on the correlations between the variables were generated and random samples were drawn from these populations. When correlations were changed and the number of omitted variables was increased, the effects of omitted variable bias were investigated. Moreover, by increasing the sample size, it was investigated whether the effects of omitted variable bias were changed depending on sample size
Anahtar Kelimeler
Omitted variable bias, model specification error, RESET test
Kaynakça
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