4. Testing for multicollinearity 1)Correlation Matrix 2)R-sq, F-statistic and t-statistics 3)Regress X1=a+a1A1+…+a1X1+a1X1+…+ a, x R-sq R X Variance inflation factor (IF) VIF()=-14. Testing for multicollinearity 1) Correlation Matrix 2) R-sq, F-statistic and t-statistics 3) Regress R-sq: Variance inflation factor (VIF): X a a X a X a X a X i i i i i k k 0 1 1 1 1 1 1 − − + + = + + + + + + 2 Xi R 2 1 VIF( ) ˆ 1 i i X b R = −