Question

Regression model: Population=f(GDP,GNI,PPI,policy)

How to collect data for dummy variable( policy )and determine its influence on population?

Answer 1

Dummy variable takes on the values 0 and 1 and divides the data in mutually exclusive. These variable are qualitative in nature. For example, D is a dummy variable which takes value D =1 if person is male and D=0 if person is female.

Population = f( GDP, GNI,NNI,policy) is the regression model.

Data on Policy

I assume the policy is mainly concern with the economic policy of a given state/province/country. So dummy variable of a particular policy (i.e fiscal policy or monetary policy) proposed for a given province/country present or not.

Let's take a simple example.

Let country A has Fiscal deficit of 3.1 % of GDP in the year 2017-2018. The government proposes a fiscal policy to reduce its fiscal deficit to 3% of GDP for the year 2018-2019.

country B has Fiscal deficit of 2.8 % of GDP in the year 2017-2018. The government proposes a fiscal policy to reduce its fiscal deficit to 2.6% of GDP for the year 2018-1019.

and so on we have other countries with their fiscal deficit

Then, we can define a dummy variable D,

D=1, Country with a fiscal deficit of 4% of GDP or less

D=0, Country with a fiscal deficit of 4% of GDP or less

You can find data for the policy from the budget of the given year/period of given state/province/country/required area. The fiscal deficit is one example. Other examples are in interest rates set by the government or repo rate by the central bank of the country.

Influence of policy on population

Economic policy depends on population.

Let's say area with large population leads to an increase in GDP due to large labor force. This will help the government to formulate economic policy for the next fiscal year.

However, population growth is not always related to economic growth. Above is just one of the scenario.