st: Endogenous Binary Interaction

["Gregory, Christian" <cgregory@ers.usda.gov>]

Hi,

I have the following model.

y1 = xb + e
y2 = y1*b1 + c1*b2 + y1*c1*b12 + xb + e

y1 and y2 are both binary. y1 is endogenous to y2. c1 is continuous and
exogenous. The marginal effect of interest is the effect of y1*c1 in the
second equation. I do have instruments for y1. I'm wondering if (1)
anyone knows of other applications in which the interaction of an
endogenous dummy and exogenous continuous variable is the outcome of
interest and (2) whether anyone has any intuition about a way to model
this. (ML models with 2 or 3 equations work and give interesting
results, but seem non-standard.)

Thanks for your help.

Christian







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