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From |
tara.iyer@duke.edu |

To |
statalist@hsphsun2.harvard.edu |

Subject |
Re: st: Interaction terms in fixed effects analysis |

Date |
Sun, 8 Feb 2009 08:58:13 -0500 |

it could be because money is not allocated efficiently, or becase of significant teacher absenteeism (a problem in India).

look over them. 1. Why would one subtract the coefficient from the regression constant in analyzing the effect of expenditure in State 1 ie. 97.34217 -0.0024748*perstudent? 2. The thing is, I am estimating a different set of dummies with xi (I had to create the variable state with State 1 = 1 and so on), and _Istate_2 and _Istate_3. Given this, would one still subtract the coefficient on perstudent from the constant fro State 1? Similarly for State 2? Thanks so much. TI Quoting "Kyle K. Hood" <kyle.hood@yale.edu>:

Tara-1. In OLS, is the effect of expenditure in State 2 on *testscore*11.16 unitsmore than State 1? Or is it 11.16 - 0.0068 (-0.0068 is thecoefficient on theinteraction between state 2 and expenditure)For state 1, you have this model: 97.34217 - 0.0024748*perstudentFor state 2, you have this model: (97.34217+11.15724) +(-0.0024748-.0067742)*perstudentEt cetera2. In Fixed Effects, _Istate_2 and _Istate_3 were dropped. _IstaXpers~2 and_IstaXpers~3 were not. How would one interpret the coefficients onIstaXpers~2and _IstaXpers~3 in the Fixed Effects model?FE is basically just an OLS. Any dummies that are taken care of bythe fixed effects procedure will be dropped. The other coefficientsare interpreted in the same way (they should be exactly the same, andthey should be interpreted in the same way). If you use fixedeffects, you don't need to use xi, unless you are estimating adifferent set of dummies with xi.3. Does the coefficient on *perstudent* indicate that increasing expenditure across *all three states* is decreasing testscores by 0.0025 units? Or does *perstudent* refer to a specific state?Perstudent represents the slope of state 1. Each of the others willbe the sum of this coefficient and the state-specific coefficient.See above.Thank you. I really appreciate your taking the time to help.Do you know why scores go down as spending goes up? -- Kyle Hood Department of Economics Yale University New Haven, CT website: http://www.econ.yale.edu/~kkh25

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**Follow-Ups**:**Re: st: Interaction terms in fixed effects analysis***From:*Clive Nicholas <clivelists@googlemail.com>

**References**:**st: Interaction terms in fixed effects analysis***From:*tara.iyer@duke.edu

**Re: st: Interaction terms in fixed effects analysis***From:*"Kyle K. Hood" <kyle.hood@yale.edu>

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