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Suppose we are interested in predicting y using variables x1 and x2. From a random sample of size n = 20, we observe the following
Suppose we are interested in predicting y using variables x1 and x2. From a random sample of size n = 20, we observe the following empirical correlation coefficients: r(x1,y)=0.7, r(x2,y)=0.3, r(x1,x2)=0.9, Compute the variance inflation factor (VIF) associated with predictors. Interpret your results. Explain why we can consider the regression of y on x1, with x2 ignored.
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