Interaction effects in econometrics
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- Balli, H.O. & Sørensen, B.E. Empir Econ (2013) 45: 583. doi:10.1007/s00181-012-0604-2
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We provide practical advice for applied economists regarding robust specification and interpretation of linear regression models with interaction terms. We replicate a number of prominently published results using interaction effects and examine if they are robust to reasonable specification permutations.