st: re: general econometrics question

[Kit Baum <kitbaum@mac.com>]

Suryadipta said

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?

If the effect of X depends on institutiional factor Z, then you  
should be using an interaction of X and Z (as well as a main effect  
of Z) because you want dY/dX to differ according to a country's level  
of Z.


Kit Baum, Boston College Economics and DIW Berlin
http://ideas.repec.org/e/pba1.html
An Introduction to Modern Econometrics Using Stata:
http://www.stata-press.com/books/imeus.html


*
*   For searches and help try:
*   http://www.stata.com/support/faqs/res/findit.html
*   http://www.stata.com/support/statalist/faq
*   http://www.ats.ucla.edu/stat/stata/