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Estimating the econometric models

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Researcher estimates the following two econometric models

Yt= β1 + β2x2t + β3x3t +ut
Yt= β1 + β2x2t + β3x3t + β4x4t +vt
Ut and Vt are iid disturbances and x3t is an irrelevant variable which does not enter into the data generating process for Yt. Will the value of (a) R^2, (b) Adjusted R^2, be higher for the second model than the first? Explain your answers

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Macroeconomics: Estimating the econometric models

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Macroeconomics: Estimating the econometric models

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