Studenmund(2006) Chapter 7 - PowerPoint PPT Presentation

PPT – Studenmund(2006) Chapter 7 PowerPoint presentation | free to download - id: 6e6e97-ZTUyN

The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
Title:

Studenmund(2006) Chapter 7

Description:

Studenmund(2006) Chapter 7 ... 89 unemplt 30.0 -0.293 0.761 93.6 17.15 30 (12.1) (9.7) RSSR ^ Sample : 60 ... (Gujarati-1995, ... – PowerPoint PPT presentation

Number of Views:12
Avg rating:3.0/5.0
Slides: 67
Provided by: eduh63
Category:
Tags:
Transcript and Presenter's Notes

Title: Studenmund(2006) Chapter 7

1
Lecture 7
Studenmund(2006) Chapter 7
Objective
Applications of Dummy Independent Variables
2
Qualitative information
Gender male and female Regional HK Island,
Kowloon NT Zone East, South, West, North,
Center Time/period peace
and war, before after crisis Age young,
High, Element Others
3
Example Gender issue of whether discrimination
is existing for salary
4
Separate sample of male
5
Separate sample of female
Female sample (Gujarati-1995, Table 15.1 15.5)
6
(No Transcript)
7
(No Transcript)
8
(No Transcript)
9
D1 D2 1 D1 1 - D2
Each dummy identify two different categories,
but when sum up two dummies it
cannot identify which is male or female
10
(Dummy variable trap)
11
Use two dummy variables to identify two different
qualitative categories in one model will be fall
into the trap of perfect multicollinearity.
General rule To avoid the perfect
multicollinearity
12
(No Transcript)
13
(No Transcript)
14
(No Transcript)
15
Separate Examples for female and male
The two regression results performed differently
in slope and intercept. But are they really
statistically different? We cannot answer from
these two separate regression results unless you
test with the F.
16
Set two different dummies for the Example
17
(No Transcript)
18
(No Transcript)
19
(No Transcript)
20
2
One qualitative variable with more than two
categories
D2 1 if high school education 0
otherwise D3 1 if college education
0 otherwise
21
(No Transcript)
22
(No Transcript)
23
(No Transcript)
24
(No Transcript)
25
One Qualitative variable with many categories
26
Qualitative variable with many categories (Cont.)
27
(No Transcript)
28
One Qualitative variable with many categories
29
Qualitative variable with many categories
(Cont.)
30
Two qualitative variables
31
(3) Mean salary for white female teacher

Y (?0 ?0 D2) ?1 X ?1D2X that
are D1 0, D2 1

(4) Mean salary for white male teacher
32
Different types of dummy regression
33
Reconstruction (46-54) Yt A0 A1 Xt
?1t Pastreconstruction (55-63) Yt B0 B1 Xt
?2t
34
(No Transcript)
35
Interactive effects between the two qualitative
variables
36
Concurrent model (or Covariance, or Slope shift
model)
37
(No Transcript)
38
(No Transcript)
39
(No Transcript)
40
Shifts in both intercept and slope
41
(No Transcript)
42
(No Transcript)
43
Quarterly effect is same as seasonal effect
Control quarter is the 4th quarter
44
(No Transcript)
45
(No Transcript)
46
(2) Structural Test based on Dummy variables
47
The Chow test on the Unemployment rate-capacity
utilization rate
48
Restriction F-test procedures
H0 No structural change H1 Yes
F gt Fc gt reject H0
49
Using the dummy variable to identify the
structural change
50
(No Transcript)
51
(2) Structural stability test based on dummy
variables
52
(No Transcript)
53
(No Transcript)
54
(No Transcript)
55
(No Transcript)
56
Whether intercept and slope change?
57
1946 - 1954 -0.2662 0.047 Income
D1 1
1955 - 1963 -1.750 0.150 Income
D1 0
58
The use of Dummy variables in the Pooled data
59
(ii) Y ?0 ?1 X1 ?2 X2 ?3 D ?4 D X2 ?5
D X3 ?
60
Chow Test - structural stability Test Using
dummy variables approach
61
GENR dummy 0 for 1946-1954 dummy 1 for
1955-1963
62
(No Transcript)
63
Using the dummy variable to identify the
structural instability
64
(No Transcript)
65
(No Transcript)
66
Read the estimated results from the dummy
regressions
For the period of 1946-1954 Savings
-0.2662 0.0470 Income
For the period of 1955-1963 savings (-0.2662
- 1.4839) (0.0470 0.1034)
-1.7501 0.1504 Income