Marginal changes in random parameters ordered response models with interaction terms

Andreas C. Drichoutis, Rodolfo M. Nayga, Jr

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Marginal changes of interacted variables and interaction terms in random parameters ordered response models are calculated incorrectly in econometric softwares. We derive the correct formulas for calculating these marginal changes. In our empirical example, we observe significant changes not only in the magnitude of the marginal effects but also in their standard errors, suggesting that the incorrect estimation of the marginal effects of these variables as is commonly practiced can render biased inferences on the findings.

Original languageEnglish
Pages (from-to)565-576
Number of pages12
JournalEconometric Reviews
Volume30
Issue number5
DOIs
Publication statusPublished - 2011 Sep 1
Externally publishedYes

Keywords

  • Discrete changes
  • Interaction term
  • Marginal effects
  • Ordered models

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Marginal changes in random parameters ordered response models with interaction terms'. Together they form a unique fingerprint.

  • Cite this