Hi,
This is a general econometrics qestion, and does not pertain to STATA
specifically. I am trying to test my theoretical model, according to
which, the effect of the most important explanatory variable on the
dependent variable is subject to whether countries are widely
different in terms of their institutions. For countries that are
similar in their institutional structure, this explanatory variable is
not important in explaining (changes in) the dependent variable. Can
anyone suggest/point me towards proper econometric tests in this case?
I have thought of some (adhoc) methods, e.g. (i) running regressions
with countries having measures of the institutional variable in the
top 25% and the bottom 25%; (ii) incorporate the difference between
the average and the individual values of the institutional variable in
the regression. However, I am not sure if there are better approaches
in doing this.
Any suggestions will be extremely helpful and highly appreciated.
Thanks,
Suryadipta.
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