correct functional form
Posted: Sun Aug 23, 2009 11:18 pm
What are the requirements in knowing the correct functional form for our model?
hi, i do know several kinds of test for this issure. Jarque-Bera test for normalty. This is sometimes regarded as test of mis-specification (Modern Econometrics, R.L.Thomas)
Another is the RESET (regression error specification test - see the same text book)
The Hausman test is also applied in this context.
another test -which is not very popular but which i use is a test of Zarembka.
the book menioned above has a couple of paged dedicated to that issue. It is easy to read.