Dear all,
In the model that I have run to analyse the effect of currency swaps on the gross capital flows of the countries signing them I have included a dummy variable for the signing of such a currency swap agreement (signing=1) as well as a dummy for whether the country is a developed economy or a developing one (developing =1) To check whether the effect of a currency swap differs between a developing or developed country I have included an interaction term between these two dummy variables (signed and developing =1). However, the results that the model produced have rendered my interaction term significant at the 1% level with a positive coefficient, but my dummy variable for the signing of the currency swap is negative (as expected) but insignificant. How do I interpret these results? Due to the fact that the original currency swap dummy variable is insignificant it is impossible to conclude how large the positive effect of a currency swap is for a developing country right? However, does it still allow me to say that a positive relationship exist, but that the size of it is unclear due to the insignificance of the foregoing dummy variable? Many thanks in advance!
Kind regards,
Owen
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