The Empirical Trap of Sign Reversals with Equality Restrictions
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.
|Date of creation:||15 Jan 2005|
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