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 language | English |
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Pages (from-to) | 565-576 |
Number of pages | 12 |
Journal | Econometric Reviews |
Volume | 30 |
Issue number | 5 |
DOIs | |
Publication status | Published - 2011 Sept |
Keywords
- Discrete changes
- Interaction term
- Marginal effects
- Ordered models
ASJC Scopus subject areas
- Economics and Econometrics