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st: Different results from interaction term and Suest Command

From   natasha agarwal <>
Subject   st: Different results from interaction term and Suest Command
Date   Wed, 16 Jun 2010 13:38:40 +0100

Dear everyone,

I am trying to test the hypothesis whether development level on a
region influences the impact of FDI on the value added of domestic
firms within a region.

For similar reasons, I estimate an augmented production function and
adopt two different strategies to test whether the slopes on the FDI
variable in the two groups are similar.

First I introduce an interaction term of FDI*Development Level where
Development Level=1 if higher developed and zero otherwise.

Second, I split the same and use the suest command and then test the
difference in the slopes with the 'test' command.

However I get two different conflicting results. When I use the
interaction term, I get that the two slopes are not significantly
different from each other while when I use the suest command and then
test for the slopes with the 'test' command I get that the slopes are
significantly different from each other.

Can anyone please explain these conflicting results?

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