Inverted U-Shape combined with moderation

[Hanna Marie]

Hello everyone,

for the analysis of my data I identified a inverted U-shape as suitable for my model. In this analysis q_tot_w is my depenent variable and rdallinances is my indepeneent variable. All others are controles. For the normal regression I squared my independent variable an named it rdalliances2. Here you can see the code.

    xtreg q_tot rdalliances rdalliances_2 rdi_w adi_w ln_emp1_w l_q_tot_w cap_int_w i.fyear munificence complexity dynamism, fe vce(robust)

Now I want to include some moderators to the model. First munificence. I am new to inverted U-shapes and unsure how to create the correct command for it. Here I did 3 tries, but I am not sure which is the correct one.

Code No. 1:

  
 xtreg q_tot c.rdalliances##c.rdalliances##c.munificence rdi_w adi_w ln_emp1_w l_q_tot_w cap_int_w i.fyear, fe vce(robust)

Code No. 2:

  
 xtreg q_tot c.rdalliances##c.rdalliances_2##c.munificence rdi_w adi_w ln_emp1_w l_q_tot_w cap_int_w i.fyear, fe vce(robust)

Code No. 3:

  
 xtreg q_tot c.rdalliances##c.munificence c.rdalliances_2##c.munificence rdi_w adi_w ln_emp1_w l_q_tot_w cap_int_w i.fyear, fe vce(robust)

Can someone give me an advice which is the correct one or if I have to do it completely different.


Best regards
Hanna 😊

[Clyde Schechter]

Code #1 is both a correct code for the model you say you want to fit and will play well with the -margins- command. Both of the others are incorrect.

[Hanna Marie]

Hello Clyde,

thanks for your help!

Regards,
Hanna