By bermyluv - 5/19/2011 2:17:13 PM
I am regressing real loss triangles and would like to examine the possibility of discrete changes in both the inflation and decay parameters. I am not quite sure how this model should be set up.
Option 1: 2 independent dummy regressors, each interacting with only 1 of the quantitative explanatory variables.
Option 2: 3 dummy regressors representing 4 mutually exclusive domains, 2 of which interact respectively with 1 or the other of the quantitative explanatory variables and the 3rd of which interacts with both.
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