What problems do you foresee in estimating the following models: a. Yt = B0 + B1D1t +
Question:
a. Yt = B0 + B1D1t + B2D2t + B3D3t + B4D4t + ut
where Dit = 1 for observation in quarter i, i = 1, 2,3,4 = 0 otherwise
b. GNP, = B1 + B2Mt + B3Mt -1 + B4(Mt - Mt-1) + ut
where GNPt = gross national product (GNP) at time t
Mt = the money supply at time t
Mt-1 = the money supply at time (t - 1)
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a Here we will fall into the dummy variable trap because ...View the full answer
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