Regression Models with Data‐based Indicator Variables

B-Tier
Journal: Oxford Bulletin of Economics and Statistics
Year: 2005
Volume: 67
Issue: 5
Pages: 571-595

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Ordinary least squares estimation of an impulse‐indicator coefficient is inconsistent, but its variance can be consistently estimated. Although the ratio of the inconsistent estimator to its standard error has a t‐distribution, that test is inconsistent: one solution is to form an index of indicators. We provide Monte Carlo evidence that including a plethora of indicators need not distort model selection, permitting the use of many dummies in a general‐to‐specific framework. Although White's (1980) heteroskedasticity test is incorrectly sized in that context, we suggest an easy alteration. Finally, a possible modification to impulse ‘intercept corrections’ is considered.

Technical Details

RePEc Handle
repec:bla:obuest:v:67:y:2005:i:5:p:571-595
Journal Field
General
Author Count
2
Added to Database
2026-01-29