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To find out which possibility will be, we can use dummy variable technique to check the model Y:CI+CD +C3X +CA(D, X)F (9.25) E(YID=0.X=C1+C3X E(YD=1X)=(C1+C2)+(C3+C4)X1 C: differential intercept 4: differential slope coefficient Y=A+A,X +uIt 9.23 Yt=B1+B2X+u2t(924) When a=C1,A2C3,then(9.26)=(9.23) B1=C1+C2,B2=C3+C4.then(9.27)=(9.24)To find out which possibility will be, we can use dummy variable technique to check the model: Yt=C1+C2Dt+C3Xt+C4 (Dt·Xt )+ut (9.25) E(Yt |Dt =0′Xt )=C1+C3Xt (9.26) E(Yt |Dt =1′Xt )=(C1+C2 )+(C3+C4 )Xt (9.27) C2 : differential intercept; C4 : differential slope coefficient Yt =A1 +A2Xt +u1t (9.23) Yt =B1 +B2Xt +u2t (9.24) When A1 = C1 , A2 = C3 , then (9.26) =(9.23). B1 = C1+C2 , B2 = C3+C4, . then (9.27) =(9.24)
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