I'm testing a structural equation model in which a variable on level 2a moderates the effect of another variable, on level 2b, on an individual-level variable y. This is a cross-classified data set and the group-level variables are in different clusters. When specifying the model, I'm using two between options: %BETWEEN level2a% and %BETWEEN level2b%, but I can't work out whether to put the interaction term in one of them, or both, or somewhere else entirely. Any suggestions?
The interaction term has to be on the within level. This would work if you use the define command to make the product, i.e., interaction between observed variables. If the interaction involves a latent variable you have to follow User's Guide example 9.26.