Multilevel models with interactions

John Kastellec writes:

Let’s say you wanted to estimate a multilevel model with an interaction in the individual-level model, say:

Pr(y=1) = logit-1(B0 + B1X + B2Z + B3XZ)

and you wanted to allow the interaction effect to vary by group. Would the correct procedure be to allow all the coefficients to vary by group, then interpret the main and interactive effects as you would normally (i.e. for each group)?

Yup.