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- Cross-level interactions are sometimes presented as an advanced topic in multi-level model. However, cross-level interactions are actually pretty simple, once you understand a couple of basics and how these models relate to normal interaction model and the random slope model. Lets use this model as our starting point. So we have the model from Holcomb that Ive used in other videos and the model has effects of year, so basically your time trend and some dependent variable. Then we say that the trend depends on firm, it depends on industry, it varies in slope, it varies in intercept. So whats the starting point varies, to which direction the trend goes, varies, and so this is just a different regression lines for different companies of time. Lets expand this the cross-level interaction model. For simplicity, Im just gonna be focusing on the first two levels. So a year observations, level one and firms, level two. To understand what the cross-level interaction is, we need to under
