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snyamhuno
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dummy variables
May 7, 2007 - 07:28 PM
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what are the importances of dummy variables in econometrics?
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Hayk
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Re: dummy variables
May 25, 2007 - 05:47 PM
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In case you havent, oyu might look at the below wiki page:
http://en.wikipedia.org/wiki/Dummy_variable
H.
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Carl Quinto
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Re: dummy variables
May 14, 2008 - 07:13 AM
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Don't want to sound like a nerd, but here it goes... 
You see, there are some variables in economic analysis that can't be measured in numbers, like sex, for example. One is either a male or a female, but not both. So when you have explanatory variables like this in your estimate equation, you assign 1 or 0 to that variable when running regressions. We assign "1" for instance when a particular sample (person) is male; otherwise (if that person is a female), we put "0". You may also interchange it, using "1" for female samples and "0" for the males. But you need to be consistent.
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