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...
If dummy variable has k categories then when to use K binomial dummies and when to use K-1 dummies to avoid dummy variable trap....
For quarterly data, seasonal dummy variables are used to see the effect of year starting and year ending. for this Eviews can be used. ...
You can learn to create dummy variable of different types and how to use them in eviews using this video...
[vc_row][vc_column][vc_column_text]Dummy variables can be used to incorporate a qualitative information in teh model which can be really useful to determine the significant characteristics of the model. Learn how to make dummy variables inside Gretl.[/vc_column_text][/vc_column][/vc_row]...