st: Specification text for continuous Interaction term model over dummy variable model.

[natasha agarwal <agarwana2@googlemail.com>]

Dear All,

I was trying to estimate a model first with continuous interaction
term and then as a dummy model, and I wanted to know which one would
be my preferred model. Is there any test to test the same.

Model 1:

xtreg x y z a*b, fe vce(robust)            [a*b=continuous interaction term]

Model 2:

xtreg x y z a*c, fe vce(robust)           [c=1 if b>0.50]

I want to test which is a better model?

Any help will be appreciated.

Thanks,
Natasha
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