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Thread: RESET test Statistic

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    RESET test Statistic




    Below is my question - I've never done a RESET calculation before so just seeking some guidance on how to start. I believe I need to add a quadratic to the second test, and then use an F-test. Is that the right way to go about it?

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    A) Compute the RESET test statistic using the following regression output, which is based on 55 observations.
    y-hat = 3.1009−5.1706x(2i) −1.1652x(3i) with R-squared = 0.9038
    y-hat = 3.3949−5.3265x(2i) −1.2339x(3i) −0.0117y-hat(2) +0.0004y-hat(3) with R-squared= 0.9069

    B) Based on the result that you found in part 3.b., what would you conclude at the 5% significance level?

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    thanks!

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    Re: RESET test Statistic


    Not familiar with your terminology, what is a RESET statistic? Examining a nested model?
    Stop cowardice, ban guns!

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