Testing the Goodness of the Model
The first and most important step in any empirical research is to determine whether the model used in the study is acceptable. When conducting an empirical study, there are steps that must be taken before starting the study and results to be checked after the regression is performed.
The foundation of any research in economics is economic theory. The importance of using economic theory and the proper procedure for conducting research have been addressed throughout this book. This chapter, which addresses one of the steps in empirical research, is about determining whether a particular regression provides acceptable results. In statistical analysis, the goodness of fit is determined ...
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