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...samples? In many statistic textbooks it is mentioned that for large samples the significance tests are independent from the distributions of residuals. Why is that? 2. RAMSEY TEST I made several scatterplots (residuals ~ predictors). Here everything looks fine but when I apply the RAMSEY resettest(), the assumption of linearity is rejected. My model does not show any signs of multicollinearity and all independent variables have strong linear relationship with the dependent variable. Therefore, I am wondering how well the RAMSEY resettest works in general. What other tests exist? Again, I...

...ity), time=factor(data$time), distance=data$distance, logr=data$logr, loginc=data$loginc) ## Estimate a simple linear model (used repeatedly in the literature, ## fails the most simple of model specification tests e.g., ## resettest()) model.linear <- lm(logrprice~.,data=data) ## Now conduct stepwise (BIC) regression using the step() function in ## the stats library. The lower model is the unconditional mean of y, ## the upper having polynomials of up to order 6 in the three ## continuous covariates, with interaction amon...