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Journal Article

Spatial autocorrelation or model misspecification? The help from RESET and the curse of small samples

Autoren

  • Vaona
  • A.

Erscheinungsdatum

DOI

10.1007/s12076-009-0022-z

JEL Classification

R12 C12 C15 R15 C21

In regression analysis,model misspecification can produce spurious spatial correlation in the residuals. By means of Monte Carlo simulations, I show that the RESET test can help to disentangle this conundrum in large samples. Small samples can pose a serious challenge to finding the correct model.

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