The regression analysis of collinear data

Abstract

This paper presents a technique based on the intuitively-simple concepts of Sample Domain and Effective Prediction Domain, for dealing with linear regression situations involving collinearity of any degree of severity. The Effective Prediction Domain (EPD) clarifies the concept of collinearity, and leads to conclusions that are quantitative and practically useful. The method allows for the presence of expansion terms among the regressors, and requires no changes when dealing with such situations.