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- Mon Mar 02, 2009 9:56 am
- Forum: Estimation
- Topic: AR(1) term in equation for cross-sectional data
- Replies: 1
- Views: 3451
AR(1) term in equation for cross-sectional data
In developing an OLS regression equation using cross-sectional data, I obtained an adjusted R^2 of 0.009. On a whim, I added an AR(1) term to the right side of the equation, even though I know of no statistical basis for doing this. The AR(1) increased the adjusted R^2 to 0.91. Does anyone have an i...