Newly proposed estimator for ridge parameter: an application to the nigerian economy

Different methods have been adopted in the estimation of ridge parameter in ordinary ridge regression estimator. In this study new ridge parameter was introduced and evaluated via simulation study and application to real life data. The proposed parameter is a function of the standard error of regression and independent of the regression coefficients. Results show that the proposed estimators when applied to ridge regression estimator have minimum mean square error (MSE) as compared to other estimators of ridge parameter and the conventional ordinary least square (OLS) estimator.