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Unformatted text preview: 1 X i + 2 D i + 3 X i D i + u i The variable X is a continuous variable, while D is a binary variable. Assume that all the least squares assumptions hold. (a) What is the expected change in Y when X changes and D = 1 ? What is the expected change in Y when X is changed and D = 0 ? (b) What are the conditions under which the expected change in Y when X is changed and D = 1 equal to the expected change in Y when X is changed and D = 0? (c) Write the population regression function when D = 1 and the population regression function when D = 0 . (d) What are the conditions under which the population regression function when D = 1 is equal to the population regression function when D = 0? 1...
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 Fall '08
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 Econometrics

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