Topic 13: Dummy Variables Flashcards
1
Q
How many dummy variables should be included given a catagory variable with 5 possible values
A
4 dummy variables!
2
Q
Can the regressant be a dummy variable?
A
No.
The error is binomial distributed, so normality assumption is broken
3
Q
How can we deal with dummy regressants?
A
Not OLS, Logit, Probit or Tobit model
