Can anyone help me. I am a new user of gretl.
I am doing OLS regression using multiple dummy independent variables. How
do I deal with multicollinearity? Gretl refuses to calculate because of
perfect collinearity. Is my approach wrong in doing multiple dummy
independent variables?
The equation specification that i am doing is:
NAT = const + b1 Dum1 + b2 Dum2 + b3 Dum3 + b4 Dum4
where:
NAT is the result of achievement tests;
const is the intercept, the value of NAT if there are no project
interventions;
b1 is the value of NAT if there is teacher traning (dummy=1);
b2 is the value of NAT if there is principal training (dummy=1);
b3 is the value of NAT if there is 1:1 student to textbook ratio
(dummy=1); and
b4 is the value of NAT if the classroom is conducive to learning (dummy =1
if it conforms to stated classroom standards)
Thanks!
Clem