Model selection involves choosing the most appropriate variables to include in a regression model from "summary" of Introduction to Econometrics by Christopher Dougherty
Model selection in econometrics is a crucial step in the regression analysis process. It entails the careful consideration of which variables to include in a regression model to ensure that the model is both accurate and meaningful. The goal of model selection is to identify the most relevant and informative variables that have a significant impact on the dependent variable. Choosing the appropriate variables for inclusion in a regression model requires a thoughtful examination of the relationship between the variables and the dependent variable. It is essential to consider not only the statistical significance of the variables but also their economic significance and theoretical relevance. Including irrelevant or redundant variables in the model can lead to biased...
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