Biometrical Letters Vol. 56(1), 2019, pp. 13-16


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A SIMPLE SOLUTION TO THE SPECIFICATION ERROR

Moawia Alghalith

Economics Dept., UWI, St Augustine, Trinidad and Tobago
e-mail: malghalith@gmail.com


We develop a simple method that completely eliminates the specification error and spurious relationships in regression. Furthermore, we introduce a stronger test of causality. We apply our method to oil prices.


spurious regression, causality, specification error, oil price