Marginal changes in random parameters ordered response models with interaction terms

Andreas C. Drichoutis, Rodolfo M. Nayga

    Research output: Contribution to journalArticlepeer-review

    7 Citations (Scopus)

    Abstract

    Marginal changes of interacted variables and interaction terms in random parameters ordered response models are calculated incorrectly in econometric softwares. We derive the correct formulas for calculating these marginal changes. In our empirical example, we observe significant changes not only in the magnitude of the marginal effects but also in their standard errors, suggesting that the incorrect estimation of the marginal effects of these variables as is commonly practiced can render biased inferences on the findings.

    Original languageEnglish
    Pages (from-to)565-576
    Number of pages12
    JournalEconometric Reviews
    Volume30
    Issue number5
    DOIs
    Publication statusPublished - 2011 Sept

    Keywords

    • Discrete changes
    • Interaction term
    • Marginal effects
    • Ordered models

    ASJC Scopus subject areas

    • Economics and Econometrics

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