The Farrar-Glaubar Approach in Testing for Multicollinearity in Economic Data
Keywords:
multicollinearity, farrar-glaubar, economic data, variablesAbstract
This research aims at determining the presence of Multicollinearity in a function using farrar-glaubar test approach. In most economic data, there is the presence of Multicollinearity but the severity varies. The degree of this multicollinearity may vary from function to function. However, Farrar-Glaubar test is used to detect the presence and severity of Multicollinearity, location of Multicollinearity, and the pattern of Multicollinearity in a function. How to correct the effect of Multicollinearity was also covered this research. After analyses were done on the collected data, we realized that, Multicollinearity is most pronounced in Economic data.
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