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st: re: dummy
Linda asked
Can dummy(ies) be used as dependent variable(s)? Please help.
Presuming you mean in a linear regression: yes, that is called a
linear probability model. It has obvious flaws: its predictions are
not constrained in (0,1) and its errors are heteroskedastic by design
(binomial). More commonly, a binomial logit (or logistic regression)
model or a binomial probit model is used. See the 'limited dependent
variables' chapter in the book cited below or any good econometrics
text for discussion of these alternatives (or Wikipedia).
Kit Baum, Boston College Economics and DIW Berlin
http://ideas.repec.org/e/pba1.html
An Introduction to Modern Econometrics Using Stata:
http://www.stata-press.com/books/imeus.html
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