9、Greg Barns, FRM, and Jill Tillman, FRM, wish to test the specification of their econometric model. Barns suggests adding another independent variable and examining the statistics of its parameters and the effects on the other parameters. Tillman suggests rerunning the regression using logarithms of the data instead of the original data. Which, if either, falls under the heading of testing the specification of an econometric model?
A)
Both the suggestion of Barns and that of Tillman.
B)
Neither the suggestion of Barns nor that of Tillman.
C)
The suggestion of Barns but not the suggestion of Tillman.
D)
The suggestion of Tillman but not the suggestion of Barns.
Both of the suggestions are methods for testing the specification of an econometric model. The point is to find if other variables have significant explanatory power and if the relationships are correctly measured.