I have a doubt about including the date - year, month as dummy 'X' variables in linear regression in Python. The issue I encounter is when forecasting 'y' variable on a date where the 'year' is new. How do I proceed on this?
E.g. Suppose I have only Y variable - sales and X as 'date'. when X is dummified to 'year' and 'month' (from 2016 to 2018) and I am predicting for 1 year that include 2019 as well, then how do I choose the dummy coding for Year when it didn't appear earlier in the data?
My question is also to understand whether it is a good practise to dummify the date to categorical binary variable or convert it to some cubic spline