Methodological Query: Resolving Small Sample Size and Loss of Degrees of Freedom in Sub-National GST Structural Break Analysis

[bharti thakur]

 Hi 

Good Evening!!!

I am facing a problem while evaluating the structural break introduced by the GST reform on state-level tax elasticity, running separate pre- and post-reform regressions[2001 to 2024 ]creates a major econometric issue: the post-GST timeline yields only seven data points, leaving us with just 5 degrees of freedom. This severely distorts R square and standard errors.

How can be this problem managed well ?

[Bindia Singla]

2

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