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


From   "Justin Smith" <smithjd5@univmail.cis.mcmaster.ca>
To   <statalist@hsphsun2.harvard.edu>
Subject   st: RE: interaction term of logritham of raw data----what form it should be?
Date   Mon, 19 Jun 2006 21:38:47 -0400

It seems to me that if you did it the first way, it would be perfectly
collinear with the variables themselves...I would go with the second method.

Justin

-----Original Message-----
From: owner-statalist@hsphsun2.harvard.edu
[mailto:owner-statalist@hsphsun2.harvard.edu] On Behalf Of Xiaoheng Zhang
Sent: June 19, 2006 5:32 PM
To: statalist@hsphsun2.harvard.edu
Subject: st: interaction term of logritham of raw data----what form it
should be?

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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