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Dummy variables vs. category-wise models

H.E.T. Holgersson, L. Nordstr�m and Özge Öner ()
Authors registered in the RePEc Author Service: Louise Nordström

Journal of Applied Statistics, 2014, vol. 41, issue 2, 233-241

Abstract: Empirical research frequently involves regression analysis with binary categorical variables, which are traditionally handled through dummy explanatory variables. This paper argues that separate category-wise models may provide a more logical and comprehensive tool for analysing data with binary categories. Exploring different aspects of both methods, we contrast the two with a Monte Carlo simulation and an empirical example to provide a practical insight.

Date: 2014
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DOI: 10.1080/02664763.2013.838665

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