Suppose the RESET test rejects its null hypothesis. What should you do?

Suppose the RESET test rejects its null hypothesis. What should you do?

A Continue with the original model you have

B Add to the model the squares and cubes of all explanatory variables in the original model

C Work with the unrestricted model that was estimated for the RESET test.

D Search for appropriate nonlinear functions of the explanatory variables in the original model and add them as additional regressors.

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