i have a panel data set where the N dimension is countries(127 countries) and T dimension is year(2010 to 2015). I use a fixed effects to estimate a model of the form:
I estimate the model and i find that the coefficient b4 is negative. All variables are continuous.
I am interested now to check the hypothesis that the effect of X4 to Y changes over time (that is if the effect of X4 to Y changes as the time dimension T=years increases) and if the effect increases/decreases.
In order to check the hypothesis i re-estimate the model including an interaction term as:
I treat the variable years as continuous. My first question is if this approach is correct in order to test the hypothesis.
After i estimate the second model i find that the coefficient of the interaction term b6 is negative and significant and the main effect b4 is positive and significant. I know that the coefficient b4 in the second model is not comparable to the coefficient b4 in the first model.
My second question is how can i interpretate this results in terms of my hypothesis.
Thank you for your time My Best Regards.