Econistics Research and Consulting | Control Variables – Use of Qualitative Variables
Use of qualitative dummy variables can increase the explanatory power of the of the model.
Econometrics, Data Science, Research Methods, Statistics, STATA, R,
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Control Variables – Use of Qualitative Variables

24 Nov Control Variables – Use of Qualitative Variables

In continuation of the discussion on selecting control variables.

One can also focus on adding dummy variables based on country composition, regime change, or structural break (for the case of time series data), also indicators like demographics, control and focus group (for the case of cross sectional data) can be used. 

They usually increase stability of the model but are tricky to identify if they are moderating the quantitative factors.

Your suggestions and participation are welcomed. 

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