Step-1 I run a regression with one independent variable (that is of primary interest to my research)
Y=b0 +b1 X1 + e
The result shows X has a negative coefficient, and significant (5% level)
Step-2 I run regression by including another variable
Y=b0 + b1 X1+b2 X2 + e
In result, b1 turns positive and b2 is also positive (and significant)
Step-3 Interaction
Y=b0 + b1 X1+b2 X2 + b3 X1 X2 + e
b1 turns negative (significant) and b3 is positive (and significant)
What is going on? Can anyone suggest the story behind this econometric exercise?
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