Additional data:

It  is possible that with additional  data the problem of multicollinearity becomes less severe although still present. This can be seen 1 from equation from above; as sample size increases, increases. Therefore, for any r,, given,  the variance of 8, will decrease, thus decreasing the standard error, which will enable us to estimate P,  with more precision, Unfortunately,  this method is usually not feasible, since  economists seldom can obtain  additional data without incurring huge costs. Sometimes  it may not be possible since the data collected was at a different time and place. Therefore, this is a solution which should be kept in mind but is hardly used in practice.