A Reinterpretation of Interactions in Regressions
12 Pages Posted: 13 Nov 2007
Date Written: November 2007
Abstract
Regression specifications in applied econometrics frequently employ regressors that are defined as the product of two other regressors to form an interaction. Unfortunately, the interpretation of the results of these models is not as straight forward as in the linear case. In this paper, we present a method for drawing inferences for interaction models by defining the partial influence function. We present an example that demonstrates how one may draw new inferences by constructing the confidence intervals for the partial influence functions based on the traditional published findings for regressions with interaction terms.
Keywords: Interaction effects, dummy variables, linear transformation, Fieller method
JEL Classification: I21, C12, C51
Suggested Citation: Suggested Citation
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