Consider the model (This is known as an analysis of variance model) Y = a + BD" + ut

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Consider the model (This is known as an analysis of variance model)
Y = a + BD" + uz
Where the D = 1 for males and 0 for females. Suppose a new dummy variable had been
defined as D = 1 for females and 0 for males. The variable D been used instead of D", in
other words, consider the new model Y; = a* + B* D + ut.
i. Derive the algebraic relationship between the new regression coefficients and the old ones.
More specifically, show how we can estimate a* B* without rerunning the regressions.
ii. Would the standard errors, t-values, R2, SSR, and F-statistic be affected? If so, in what
ways?
Transcribed Image Text:Consider the model (This is known as an analysis of variance model) Y = a + BD" + uz Where the D = 1 for males and 0 for females. Suppose a new dummy variable had been defined as D = 1 for females and 0 for males. The variable D been used instead of D", in other words, consider the new model Y; = a* + B* D + ut. i. Derive the algebraic relationship between the new regression coefficients and the old ones. More specifically, show how we can estimate a* B* without rerunning the regressions. ii. Would the standard errors, t-values, R2, SSR, and F-statistic be affected? If so, in what ways?
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