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  3. 2 10 marks consider the following relationship between the amount...

Question: 2 10 marks consider the following relationship between the amount...

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2. (10 marks) Consider the following relationship between the amount of money spent by the province on welfare programs (Y) and the provinces revenue (X) where D1 is a dummy variable that takes the value 1 if the state legislature is controlled by Reform and 0 otherwise, and * means multiplication. Your research assistant decided to define another dummy variable, D2, which takes the valuc 1 if the legislature is controlled by non-Reform party and 0 otherwise, and estimate the following model instead. Describe step by step how you can obtain estimates of the as from those Bs, without running another regression. That is, you should derive expressions for s in terms of βs
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