I want to estimate an equation and in this equation i have percapita GDP and (percati?

Question

for exampel at this taim i want to estimate an equation and in this equation i have percapita gdp and (percatia dgp)^2 and then i find the problem of colinearity in my estimation how can i solve this problem?do you know ?

I want to estimate an equation and in this equation i have percapita gdp and (percatia dgp)^2 and then i find the problem of colinearity in my estimation how can i solve this problem?do you know ?

Answer 1

The answer to your original question is to remove one of the variables.  GDP and GDP/capita are going to be very highly correlated.  I would remove GDP since GDP/cap. is a better measure of the wealth in a country.