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st: interaction term of logritham of raw data----what form it should be?


From   Xiaoheng Zhang <zhangx@tcd.ie>
To   statalist@hsphsun2.harvard.edu
Subject   st: interaction term of logritham of raw data----what form it should be?
Date   Mon, 19 Jun 2006 22:32:07 +0100

Hello all,

I have two variables that are

agglopharma = number of firms (ranging from 5 to 300)
eatr = effective average tax rate (ranging from 8.5 to 55)

They all enter the conditional logit regression in log form.I would like to use
interaction term of these two variables(also in log form),which one should I
use?

ln(agglopharma*eatr) = ln(agglopharma)+ln(eatr)

or

ln(agglopharma)*ln(eatr) = ln(agglopharma+eatr)?

Thanks for reading anf TIA!

Kevin

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