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A Reinterpretation of Interactions in Regressions

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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.

Suggested Citation

  • J. Hirschberg & J. Lye, 2007. "A Reinterpretation of Interactions in Regressions," Department of Economics - Working Papers Series 1015, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:1015
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    1. Wo[ss]mann, Ludger & West, Martin, 2006. "Class-size effects in school systems around the world: Evidence from between-grade variation in TIMSS," European Economic Review, Elsevier, vol. 50(3), pages 695-736, April.
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    3. Hans Bonesrønning, 2003. "Class Size Effects on Student Achievement in Norway: Patterns and Explanations," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 952-965, April.
    4. Akerhielm, Karen, 1995. "Does class size matter?," Economics of Education Review, Elsevier, vol. 14(3), pages 229-241, September.
    5. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(2), pages 533-575.
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    Cited by:

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    4. Kleoniki Kalapouti & Nikos Varsakelis, 2015. "Intra and inter: regional knowledge spillovers in European Union," The Journal of Technology Transfer, Springer, vol. 40(5), pages 760-781, October.

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    More about this item

    Keywords

    Interaction effects; dummy variables; linear transformation; Fieller method;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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