1Centre for Econometric and Allied Research(CEAR), University of Ibadan, Ibadan, Nigeria. E-mail: ddmetra_utibe@yahoo.com
2Department of Banking & Finance, Rivers State University of Science & Technology Port Harcourt, Nigeria E-mail: watiamadii@yahoo.com
3Department of Mathematics, Rivers State College of Education Port Harcourt, Nigeria E-mail: nathojekudoyahoo.com
The Cobb-Douglas model is a common occurrence in econometrics and other areas of research. In this study, involving small samples, we investigate the consequences and the seriousness of such consequences of mis-specifying the error term. Our results, show that the consequence is more serious when a multiplicative error plagued data set is fitted with an additive error based model than vice-versa.This result and trend also hold in the presence of multicollinearity.
Cobb-Douglass model, mis-specifying, multicollinearity
