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Article
How Smart is My Dummy? Time Series Tests for the Influence of Politics
Political Analysis
  • Tony Caporale, University of Dayton
  • Kevin B. Grier, Centro de Investigación y Docencia Económicas
Document Type
Article
Publication Date
1-1-2005
Abstract

Of necessity, many tests for political influence on policies or outcomes involve the use of dummy variables. However, it is often the case that the hypothesis against which the political dummies are tested is the null hypothesis that the intercept is otherwise constant throughout the sample. This simple null can cause inference problems if there are (nonpolitical) intercept shifts in the data and the political dummies are correlated with these unmodeled shifts. Here we present a method for more rigorously testing the significance of political dummy variables in single equation models estimated with time series data. Our method is based on recent work on detecting multiple regime shifts by Bai and Perron. The article illustrates the potential problem caused by an overly simple null hypothesis, exposits the Bai and Perron model, gives a proposed methodology for testing the significance of political dummy variables, and illustrates the method with two examples.

Inclusive pages
77-94
ISBN/ISSN
1047-1987
Comments

Permission documentation is on file.

Publisher
Oxford University Press
Peer Reviewed
Yes
Citation Information
Tony Caporale and Kevin B. Grier. "How Smart is My Dummy? Time Series Tests for the Influence of Politics" Political Analysis Vol. 13 Iss. 1 (2005)
Available at: http://works.bepress.com/tony_caporale/42/