Intro to Econometrics
The condition index is a measure used to assess multicollinearity in regression analysis by quantifying the extent to which the variables in a model are correlated with each other. A high condition index indicates potential issues with multicollinearity, where predictor variables are highly correlated, leading to instability in the estimated coefficients. This index helps to identify how much the variance of the estimated coefficients may be inflated due to multicollinearity.
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