IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/81390.html
   My bibliography  Save this paper

Addressing multicollinearity in regression models: a ridge regression application

Author

Listed:
  • Bager, Ali
  • Roman, Monica
  • Algedih, Meshal
  • Mohammed, Bahr

Abstract

The aim of this paper is to determine the most important macroeconomic factors which affect the unemployment rate in Iraq, using the ridge regression method as one of the most widely used methods for solving the multicollinearity problem. The results are compared with those obtained with the OLS method, in order to produce the best possible model that expresses the studied phenomenon. After applying indicators such as the condition number (CN) and the variance inflation factor (VIF) in order to detect the multicollinearity problem and after using R packages for simulations and computations, we have proven that in Iraq, as an Arabic developing economy, unemployment seems to be significantly affected by investments, working population size and inflation.

Suggested Citation

  • Bager, Ali & Roman, Monica & Algedih, Meshal & Mohammed, Bahr, 2017. "Addressing multicollinearity in regression models: a ridge regression application," MPRA Paper 81390, University Library of Munich, Germany, revised Jun 2017.
  • Handle: RePEc:pra:mprapa:81390
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/81390/3/MPRA_paper_81357.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jaba, Elisabeta & Balan, Christiana & Roman, Mihai & Roman, Monica, 2010. "Statistical evaluation of spatial concentration of unemployment by gender," MPRA Paper 25161, University Library of Munich, Germany, revised May 2010.
    2. Jaba, Elisabeta & Balan, Christiana & Roman, Monica & Viorica, Daniela & Roman, Mihai, 2008. "Employment rate prognosis on the basis of the development environment trend displayed by years-clusters," MPRA Paper 20337, University Library of Munich, Germany, revised Sep 2008.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ali Sadiq Mohommed BAGER & Bahr Kadhim MOHAMMED & Hajem Ati Daham & Sadiq AL-HUSSEINY, 2019. "The Stepwise Regression Model For Study The Unemployment Rate In Iraq," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 13(1), pages 811-815, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simionescu Mihaela & Naroș Maria-Simona, 2019. "The Unemployment of Highly Educated People in Romania. A Panel VAR Approach," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 29(3), pages 20-37, September.
    2. Ali Sadiq Mohommed BAGER & Bahr Kadhim MOHAMMED & Hajem Ati Daham & Sadiq AL-HUSSEINY, 2019. "The Stepwise Regression Model For Study The Unemployment Rate In Iraq," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 13(1), pages 811-815, November.
    3. Jaba, Elisabeta & Balan, Christiana & Roman, Mihai & Roman, Monica, 2010. "Statistical evaluation of spatial concentration of unemployment by gender," MPRA Paper 25161, University Library of Munich, Germany, revised May 2010.
    4. Ana-Maria AMARIEI (COJOCARIU), 2015. "Comparative Analyses Of Fertility Evolution In Iasi County," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7(2), pages 224-231, August.
    5. Elisabeta JABA & Alina Mariuca IONESCU & Corneliu IATU & Christiana Brigitte BALAN, 2009. "The Evaluation Of The Regional Profile Of The Economic Development In Romania," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 56, pages 537-549, November.

    More about this item

    Keywords

    multicollinearity; ridge regression method; unemployment rate.;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:81390. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.