-generation process, the least-squares estimators have smaller bias (in fact zero bias) but larger variances in the long regression than … in the short regression. But if the long regression is also misspecified, the bias may not be smaller. We provide bias …

In this paper I discuss three issues related to bias of OLS estimators in a general multivariate setting. First, I … discuss the bias that arises from omitting relevant variables. I offer a geometric interpretation of such bias and derive … sufficient conditions in terms of sign restrictions that allows us to determine the direction of bias. Second, I show that …