On Fri, Nov 9, 2012 at 7:42 PM, Anat (Manes) Tchetchik
<anatmanes@gmail.com> wrote:
> What is the correlation between x1 and x2?
> Plugging residuals from the regression of x2 in x1 should address
> problem of collinearity (though I think you should run equation (2)
> without constant.
That makes no sense to me: you added x2 because you think it is
correlated with x1, otherwise you would not need to control for x2.
Taking the correlation between x1 and x2 out of the model defeats the
very purpose of trying to control for x2.
-- Maarten
---------------------------------
Maarten L. Buis
WZB
Reichpietschufer 50
10785 Berlin
Germany
http://www.maartenbuis.nl
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