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st: Intepretation of interaction terms

From   lreine ycenna <>
Subject   st: Intepretation of interaction terms
Date   Mon, 23 May 2011 12:45:50 +0100


I think I need someone to enlighten me a little on how to interprete
interaction terms in regressions,

so that I can move on to do other tests in stata.

I have linear equations, all varables are numeric and I'm using
xtreg,rreg and pooled:

(1) y = a + b + axb

(2) y = a + b + c + axb + axc

In (1), the coefficient of a becomes the effect of a when b is zero;
coef of b becomes the effect of b when a is zero.
In (2), since not all variables are interacted, we cannot inteprete it
as we do in (2). Therefore, the coef of b is influenced by c, and the
coef of c is influenced by b.

Please correct me if i'm wrong.
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