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Authors: Samuel Cameron
Chapter from: "Econometrics"
Published by: McGraw Hill Education
Published in: 2005

Abstract

Chapter 7. The book aims to introduce students with little or no previous experience in econometrics to this important discipline. This text focuses on explaining why econometrics exists and how it can be used in everyday life. This text adopts a strong student-focused approach to the discipline. In doing so, it aims to address fundamental issues in econometrics in an accessible manner for students, who are often put off by the difficult nature of the subject. The learning objectives of this chapter are: (1) know what a dummy variable is and be able to construct and use one; (2) know what a trend variable is and be able to construct and use one; (3) be able to use a dummy variable for testing forecast errors; (4) know the difference between shift and slope dummies; and (5) have a critical awareness of the limitations of using dummies to estimate the impact of non-measured variables like sexual and racial discrimination.

About

Abstract

Chapter 7. The book aims to introduce students with little or no previous experience in econometrics to this important discipline. This text focuses on explaining why econometrics exists and how it can be used in everyday life. This text adopts a strong student-focused approach to the discipline. In doing so, it aims to address fundamental issues in econometrics in an accessible manner for students, who are often put off by the difficult nature of the subject. The learning objectives of this chapter are: (1) know what a dummy variable is and be able to construct and use one; (2) know what a trend variable is and be able to construct and use one; (3) be able to use a dummy variable for testing forecast errors; (4) know the difference between shift and slope dummies; and (5) have a critical awareness of the limitations of using dummies to estimate the impact of non-measured variables like sexual and racial discrimination.

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