Abstract: | This paper investigates two “non-exact” t-type tests, t( k2) and t(k2), of the individual coefficients of a linear regression model, based on two ordinary ridge estimators. The reported results are built on a simulation study covering 84 different models. For models with large standard errors, the ridge-based t-tests have correct levels with considerable gain in powers over those of the least squares t-test, t(0). For models with small standard errors, t(k1) is found to be liberal and is not safe to use while, t(k2) is found to slightly exceed the nominal level in few cases. When tie two ridge tests art: not winners, the results indicate that they don't loose much against t(0). |