6)Seogang university management accounting12

6)Seogang university management accounting12 - N7. Zoning...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: N7. Zoning But first a digression on causality and instruments and then go back to finish N6, Glaeser and Kahn. Consider an model of the demand for orange juice ln Q D = a D + b D ln P + D Suppose regress ln Q on ln P . What is the problem? Endogeneity. Equilibrium price and quantity are determined by supply and demand. ln Q S = a S + b S ln P + S So ln P is positively correlated with demand shock D . Will bias estimate of b D downward. Solution. Find an instrument. Something correlated with ln P but not D . W h a t i s a great instrument here? Can run two-stage least squares: regress ln P on instrument. Then regress ln Q on fitted value of ln P (i.e. the value on the regression line from stage 1.) What make weather in Florida such a great instrument? Highly correlated with ln P Not correlated with demand shock. Freezing weather in Florida doesnt mean the people will want to drink more orange juice. Other example of an instrument Question: does unionism have geographic spillovers Coal mines as an instrument Now look at Glaser and Kahn ln D = + 1 Cars + Hypothesis is that...
View Full Document

This note was uploaded on 02/17/2011 for the course ACCT 2050 taught by Professor None during the Spring '11 term at Algoma University.

Page1 / 13

6)Seogang university management accounting12 - N7. Zoning...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online