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Suppose you are estimating a model of the formYi = a+b*Di+g*Xi+d*MiXi+e_i whereXis a continuous regressor, andDis a dummy variable. The figure below provides a graphical
Suppose you are estimating a model of the formYi = a+b*Di+g*Xi+d*MiXi+e_i whereXis a continuous regressor, andDis a dummy variable. The figure below provides a graphical representation of this model using the same framework Prof. Duflo used in class.
Y Di= 1 Di = 0 XStep by Step Solution
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