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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