Wednesday, May 29, 2019

Is a Logarithmic interaction term possible?

Hello,
I'm currently working on an econometric conflict model, where I've taken the natural logarithms of my independent and dependent variables mainly to reduce data skewness. Now I want to add a variable interaction, but I'm not sure if it's interfering and if it's ok too.

My equation has this form:

LogConflict = a * log (Quantities) + b * log (Value) + c * (log (Quantities) * log (Value)) + epsilon

Does it make sense? I hope someone here can help me. I will appreciate it a lot.

No comments:

Post a Comment