A Dummy Independent variable e Consider a simple model with one continuous variable(x) and one dummy (d) ◆y=B+ad+B1x+ o This can be interpreted as an intercept shift o If d=0, then y=Bo+ Bx+u o If d=1, then y=(Bo+8)+Bx+u 2 The case of d=0 is the base group Economics 20- Prof andersonEconomics 20 - Prof. Anderson 3 A Dummy Independent Variable Consider a simple model with one continuous variable (x) and one dummy (d) y = b0 + d0d + b1 x + u This can be interpreted as an intercept shift If d = 0, then y = b0 + b1 x + u If d = 1, then y = (b0 + d0 ) + b1 x + u The case of d = 0 is the base group