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Suppose the true specification of a model is Y = β1 + β2X2 + u, but the model is misspecified and a multiple regression model is estimated instead. What is the consequence of including an irrelevant explanatory variables?

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MCQs on Econometrics, which is the use of statistical methods to develop theories or test existing hypotheses in economics or finance. 
 


Suppose the true specification of a model is Y = β<sub>1</sub> + β<sub>2</sub>X<sub>2 </sub>+ u, but the model is misspecified and a multiple regression model is estimated instead. What is the consequence of including an irrelevant explanatory variables?





 
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