hi guys.

I am finding a way to make regression model only using categorical variables.

my data consists of a continuous dependent variable and 2 categorical independent variables(one has 20 categories and the other has 1000 categories).

I found several way to deal wit categorical variable but it all about binary variable.

my model would be Hierarchical Model like

y = a[x2_idx]+ b[x2_idx] * x1

if any of you guys know a solution, please let me know.

it would be big help and really appreciated ! thank you!