# multicollinearity in OLS regression [duplicate]

If I have a dependent variable Y and two independent variables X1 and X2 , that are highly correlated.

Y ~ beta1*X1 + beta2*X2

What issues can multicollinearity cause in an OLS regression, apart from unstable beta1 and beta2 estimates ?

## marked as duplicate by gung - Reinstate Monica♦, Glen_b, Peter Flom - Reinstate Monica♦May 6 '14 at 9:48

• What would it mean for the $R^2$ to be "higher than it should be"? – gung - Reinstate Monica May 6 '14 at 2:27