IVpictures

IVpictures - this P Q Suppose Two Different Values of Z the...

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P Q
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P Q Q D = b0+b1*P+u Q S = a0+a1*P+a2*Z+v
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P Q Inverse of Q D = b0+b1*P+u Inverse of Q S = a0+a1*P+a2*Z+v Market Equilibrium
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P Q What Will Data on P and Q Look Like As v and u Vary?
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P Q What Will Data on P and Q Look Like As v and u Vary?
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P Q What Will Data on P and Q Look Like As v and u Vary? Best Fit Demand Curve or Supply Curve
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P Q To Estimate the Demand Curve We Need Something that Generates Points Along the Demand Curve Holding u Fixed! The “idea” behind IV is that there may be a supply-function shifter that does
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Unformatted text preview: this! P Q Suppose Two Different Values of Z, the observed supply-function shifter The “idea” behind IV is that there may be a supply-function shifter that does this! “Outcomes Where Input is Expensive” “Outcomes Where Input is Cheap” P Q Comparing the Average of the Cheap and Expensive Outcomes Allows Us to Recover the Demand Curve “Outcomes Where Input is Expensive” “Outcomes Where Input is Cheap”...
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IVpictures - this P Q Suppose Two Different Values of Z the...

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