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Monday, April 07, 2008

"Although interaction terms are used widely in applied econometrics, and the correct way to interpret them is known by many econometricians and statisticians, most applied researchers misinterpret the coefficient of the interaction term in nonlinear models. A review of the 13 economics journals listed on JSTOR found 72 articles published between 1980 and 1999 that used interaction terms in nonlinear models. None of the studies interpreted the coefficient on the interaction term correctly."

Aww.
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