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Regression models with data-based indicator variables

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 ...

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Publication status:
Published
Peer review status:
Peer reviewed

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Institution:
University of Oxford
Division:
SSD
Department:
Economics
Research group:
Econometrics
Oxford college:
Nuffield College
Role:
Author
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Institution:
Universidade Católica Portuguesa
Role:
Author
Journal:
Oxford Bulletin of Economics and Statistics Journal website
Volume:
67
Issue:
5
Pages:
571-595
Publication date:
2005-10-01
DOI:
ISSN:
0305-9049
Language:
English
Keywords:
Subjects:
UUID:
uuid:8d45b23f-2360-4830-9a05-c7fc034fea78
Local pid:
ora:1942
Deposit date:
2008-05-13

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