I am having issues trying to specify my regression equation. I am trying to evaluate the effects of a policy change that took place in 2008. My data range from 2002 to 2014. I would like to know whether intermediate algebra helps students learn introductory economics - a policy that was instituted in 2008.
To test this hypothesis, I created four dummy variables as follow: IAi = 1 for intermediate algebra and IAi = 0 for not intermediate algebra; IAj = 1 for intermediate algebra and IAj = 0 for not intermediate algebra (students who received waivers); IAt = 1 for intermediate algebra and IAt = 0 for not intermediate algebra; and HMt = 1 for higher level mathematics and HMt = 0 for not higher level mathematics. The subscripts i, j and t stand for the time periods 2002-2008, 2009-2014 and 2002-2014 respectively.
The proposed regression model using Ordinary Least Squares (OLS) is as follows:
Ys = α + β1IAj + β2IAt + β3HMt + εs; where Y is the grade the student received in economics.
My problem is more with the time subscripts. I am not sure if this is correct. Please help. Thx.
Model specification issue
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