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# Re: st: Testing interaction terms / mutually exclusive variables

 From David Hoaglin To statalist@hsphsun2.harvard.edu Subject Re: st: Testing interaction terms / mutually exclusive variables Date Thu, 20 Jun 2013 12:18:29 -0400

```Verena,

If I may ask an ignorant question, in what way does -test- not take
into account the fact that the two dummy variables are mutually
exclusive?  (I do not have Stata documentation handy.)  If the two
dummy variables are in the same regression model, the covariance
matrix of the estimated coefficients reflects that structure.  Can you
use -lincom- after the regression command?  I do not yet understand,
however, why you would need -lincom-.  The usual output from a
regression includes a confidence interval for each coefficient, and
the test of whether the coefficient is zero is equivalent to asking
whether zero is in the confidence interval.

If those two dummy variables are also exhaustive, one of them may be
considered part of the definition of the intercept.  Then the
coefficient of the other dummy variable will be the estimated
difference between the two categories (i.e., the additional intercept
for the second category).

David Hoaglin

On Thu, Jun 20, 2013 at 11:53 AM, Verena Dill <dill@uni-trier.de> wrote:
> re-reading my emails I concluded that it may not have been the best way to
> explain my problem. I will try a better strategy:
>
> I have two dummy variables that are mutually exclusive. For example, a firm
> belongs to the service sector, to the manufacturing sector or other sectors.
> I am running a regression and want to test whether or not the estimated
> coefficients are signficantly different from zero. One approach is to use
> the post-estimation command "test". Howover, "test" does not take into
> account that the two dummy variables are mutually exclusive. Is there
> another procedure that does this?
>
>
> Thank you very much in advance
> Verena
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