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Multicollinearity: Is this a Concern?

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If the multiple coefficient of determination that relates x3 to all the other independent variables, R2(x3) = .8, calculate the variance inflation factor for x3. Should the analyst be concerned about multicollinearity? Why?

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The solution gives detailed steps on computing the variance inflation factor. All formula and calculations are shown and explained.

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The variance inflation factor = 1/(1-0.8^2)=2.78. A rule of thumb ...

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