why does adjusted R-squared gets smaller?

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bibimiwi
Posts: 35
Joined: Mon Apr 07, 2014 4:52 am

why does adjusted R-squared gets smaller?

Postby bibimiwi » Sun May 04, 2014 12:10 pm

Hello,
I have got a question concerning the adjusted R-squared.
I estimated an OLS model using X1 X2 D1 D2 as explanatory variables. D1 and D2 are dummy variables. For this model I get an adjusted R-squared of 0.13.
Then I wanted to specify my model and introduced X1D1 and X2D2. Now my adjusted R-squared is reduced to 0.11. What does it get smaller? Should it not always increase the more explanatory variabled I use, as it is the case with R-squared?

Thank you very much

EViews Gareth
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Re: why does adjusted R-squared gets smaller?

Postby EViews Gareth » Sun May 04, 2014 3:51 pm



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