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Re: st: Hausman Test & Interaction terms
Max Kosak wrote:
> this is a general question,but maybe with a complex answer.
> the question is:should i include interaction terms when running test
> the background:i have a large panel data set and want to estimate a wage
> function which includes a lot of interaction terms. should i include them
> running the hausman test or the Breusch Pagan Lagrange multiplier test?
I've not read anything (yet) which says you couldn't do that. In any case,
there's nothing stopping you from running two tests: one with the
interactions; and one without. Indeed, you may gain some strong empirical
insight from doing just this.
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