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A Numerical Example of the Practical Use of Dummy Variables

Published online by Cambridge University Press:  28 April 2015

Charles Sappington*
Affiliation:
University of Tennessee

Extract

Although the use of dummy variables in regression analysis is quite common, the implications of alternative models for incorporating dummy variables are not generally understood. References dealing with the use of dummy variables are numerous but scattered in the literature. The purpose of this article is to demonstrate, using numerical examples, the implications and interrelationships among various models which incorporate dummy variables. Five separate models are considered.

Type
Research Article
Copyright
Copyright © Southern Agricultural Economics Association 1970

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References

1. Ben-David, Shaul and Tomek, William G., Allowing for Slope and Intercept Changes in Regression Analysis, AER 179, Cornell University, Nov. 1965.Google Scholar
2. Johnston, J., Econometric Methods, McGraw-Hill Book Company, Inc., New York, 1963.Google Scholar
3. Suits, Daniel B., “Use of Dummy Variables in Regression Equation,” J of American Statistics Association, pp. 548551, Dec. 1957.Google Scholar
4. Tomek, William G., “Using Zero-One Variables with Time Series Data in Regression Equations,” J. of Farm Econ., pp. 814822, Nov. 1963 Google Scholar
5. University of California, BMD Bromedical Computer Programs, BMD02R program, University of California Press, Los Angeles, 1968.Google Scholar