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Economics

University of North Dakota

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Endogeneity

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Full-Text Articles in Social and Behavioral Sciences

Mission Accomplished: A Reply To Reuveny And Keshk, Cullen F. Goenner Feb 2013

Mission Accomplished: A Reply To Reuveny And Keshk, Cullen F. Goenner

Economics & Finance Faculty Publications

Reuveny and Keshk (“Reconsidering trade and conflict simultaneity: The risk of emphasizing technique over substance,” this issue, 2013) argue that the econometric techniques used by Goenner (Conflict Management and Peace Science 28(5): 459–477, 2011) to test and control for endogeneity when estimating the relationship between trade and conflict lack substance. Both sets of authors propose the use of instrumental variable methods, which are known by econometricians to be the natural remedy for estimation with potentially endogenous regressors. Where Goenner (2011) and Reuveny and Keshk (2013) agree is that theory should guide variable selection and the model’s specification. Yet they …

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Simultaneity Between Trade And Conflict: Endogenous Instruments Of Mass Destruction, Cullen F. Goenner Nov 2011

Simultaneity Between Trade And Conflict: Endogenous Instruments Of Mass Destruction, Cullen F. Goenner

Economics & Finance Faculty Publications

The classical liberal belief is trade, which economically benefits countries, creates ties binding the interests of countries and reduces conflict. While the vast majority of the empirical literature supports this view, recent research questions these findings by also considering the reciprocal relationship between trade and conflict. If conflict also influences trade, then trade is an endogenous right hand side regressor and previous estimates which ignore this are inconsistent. This article determines when one uses appropriate instruments for the endogenous regressors that trade reduces conflict and conflict reduces trade. Failure to use such instruments results in inconsistent estimates and can lead …

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