class6-642-08

class6-642-08 - Econ 642, Wednesday April 9, class 6 Econ...

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Econ 642, Wednesday April 9, class 6 Econ 642, Wednesday April 9, class 6 Robert de Jong 1 1 Department of Economics Ohio State University Robert de Jong Econ 642, Wednesday April 9, class 6
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Econ 642, Wednesday April 9, class 6 Chapter 15 Outline 1 Econ 642, Wednesday April 9, class 6 Chapter 15 Robert de Jong Econ 642, Wednesday April 9, class 6
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Econ 642, Wednesday April 9, class 6 Chapter 15 Chapter 15: Instrumental variables estimation and two stage least squares Scope for these techniques is twofold: 1 endogenous explanatory variable: e.g., explain poverty level from corruption level 2 omitted variable: e.g., explain unemployment claims from enterprise zone presence Robert de Jong Econ 642, Wednesday April 9, class 6
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Econ 642, Wednesday April 9, class 6 Chapter 15 Omitted variables: options: 1 ignore the problem, accept biased estimators 2 find a proxy for the unobserved variable 3 use fixed effect or first differencing method if the variable does not change over time 4 leave omitted variable in error term, but adjust estimation technique Robert de Jong Econ 642, Wednesday April 9, class 6
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This note was uploaded on 07/17/2008 for the course ECON 642 taught by Professor De jong during the Spring '08 term at Ohio State.

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class6-642-08 - Econ 642, Wednesday April 9, class 6 Econ...

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