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You are presented with two possible models to explain a batch of data: y = X+ & and y = 28+ v where X
You are presented with two possible models to explain a batch of data: y = X+ & and y = 28+ v where X and Z may contain some common variables and/or transformations of variables contained in the other data matrix (e.g., like logs or squares or the variables). How would you go about deciding which model specification is preferred? What could you do to choose between the models and what could you do to avoid such a choice?
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