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Articles 1 - 9 of 9
Full-Text Articles in Econometrics
How Likely Is It That Omitted Variable Bias Will Overturn Your Results?, Deepankar Basu
How Likely Is It That Omitted Variable Bias Will Overturn Your Results?, Deepankar Basu
Economics Department Working Paper Series
Building on a recently developed methodology for sensitivity analysis that parametrizes omitted variable bias in terms of partial R-Squared measures, I propose a simple statistic to capture the severity of omitted variable bias in any observational study: the probability of omitted variable bias overturning the reported result. The central element of my proposal is formal covariate benchmarking, whereby researchers choose an observed regressor (or a group of observed regressors) to benchmark the relative strength of association of the omitted regressor with the outcome variable and with the treatment variable. These relative strengths of association function as the two sensitivity parameters …
Formal Covariate Benchmarking To Bound Omitted Variable Bias, Deepankar Basu
Formal Covariate Benchmarking To Bound Omitted Variable Bias, Deepankar Basu
Economics Department Working Paper Series
Covariate benchmarking is an important part of sensitivity analysis about omitted variable bias and can be used to bound the strength of the unobserved confounder using information and judgments about observed covariates. It is common to carry out formal covariate benchmarking after residualizing the unobserved confounder on the set of observed covariates. In this paper, I explain the rationale and details of this procedure. I clarify some important details of the process of formal covariate benchmarking and highlight some of the difficulties of interpretation that researchers face in reasoning about the residualized part of unobserved confounders. I explain all the …
The Yule-Frisch-Waugh-Lovell Theorem For Linear Instrumental Variables Estimation, Deepankar Basu
The Yule-Frisch-Waugh-Lovell Theorem For Linear Instrumental Variables Estimation, Deepankar Basu
Economics Department Working Paper Series
In this paper, I discuss three aspects of the Frisch-Waugh-Lovell theorem. First, I show that the theorem holds for linear instrumental variables estimation of a multiple regression model that is either exactly or overidentified. I show that with linear instrumental variables estimation: (a) coefficients on endogenous variables are identical in full and partial (or residualized) regressions; (b) residual vectors are identical for full and partial regressions; and (c) estimated covariance matrices of the coefficient vectors from full and partial regressions are equal (up to a degree of freedom correction) if the estimator of the error vector is a function only …
Alternative Approaches To Labor Values And Prices Of Production: Theory And Evidence, Deepankar Basu, Athanasios Moraitis
Alternative Approaches To Labor Values And Prices Of Production: Theory And Evidence, Deepankar Basu, Athanasios Moraitis
Economics Department Working Paper Series
In this paper, we discuss three approaches to estimating classical prices of production(long run equilibrium prices) in both a circulating capital model and a model that includes capital stock: the Standard Interpretation of Marx’s value theory, the New Interpretation of Marx’s value theory, and the Sraffian approach to prices of production. We add two refinements to both models: (a) allowing for differential wages rates across industries; and(b) taking account of unproductive industries in labor value calculations. We implement(a) the circulating capital models using harmonized input-output data from the World Input Output Database for 37 countries for the period 2000–2014, and …
Covariate Benchmarking For Sensitivity Analysis When The Confounder Is Correlated With Observed Covariates, Deepankar Basu
Covariate Benchmarking For Sensitivity Analysis When The Confounder Is Correlated With Observed Covariates, Deepankar Basu
Economics Department Working Paper Series
Covariate benchmarking is an important part of sensitivity analysis about omitted variable bias and can be used to bound the strength of the unobserved confounder using information and judgments about observed covariates. It is common to carry out formal covariate benchmarking under the assumption that the unobserved confounder is orthogonal to the observed covariates. This assumption is restrictive and will be difficult to defended in most empirical analyses. In this paper I show that relaxing the orthogo- nality assumption leads to a breakdown of a recently proposed innovative formal covariate benchmarking methodology.
Long-Run Effects Of Austerity, Guilherme Klein Martins
Long-Run Effects Of Austerity, Guilherme Klein Martins
Economics Department Working Paper Series
This paper provides evidence that austerity shocks have long-run negative effects on GDP. Besides addressing the important gap in the growing fiscal research regarding the short time horizon of the estimations, this paper analyzes two other important assumptions made in the literature regarding the (i) symmetry of episodes of fiscal expansion and con- traction and (ii) uniformity of fiscal multipliers for different sizes of shocks. We use narrative fiscal shocks and propensity score reweighting in a local projections setup to account for the potential endogeneity of austerity policies and the non-linearity of its effects over time. The estimation is also …
Dimensional Analysis And Logarithmic Transformations In Applied Econometrics, Deepankar Basu
Dimensional Analysis And Logarithmic Transformations In Applied Econometrics, Deepankar Basu
Economics Department Working Paper Series
In economics, it is common to use dimensioned variables, e.g. earn- ings (measured in dollars per year), as arguments in the logarithmic function. This is conceptually problematic because a logarithmic func- tion can only take dimensionless quantities as its argument. One way to avoid this conceptual error is to rewrite commonly used logarithmic regressions using an arbitrarily chosen reference unit so that ratios of dimensioned quantities are used in logarithmic functions. With the addition of a zero conditional mean assumption about the reference unit to the standard list of assumptions about asymptotic properties of ordinary least squares estimators, such a …
Capital Nationality And Economic Development, Guilherme Klein Martins
Capital Nationality And Economic Development, Guilherme Klein Martins
Economics Department Working Paper Series
This paper reviews different literature strands and performs an empirical test to evaluate how capital ownership, particularly its nationality, might affect long-run economic develop- ment. Our results indicate that low and middle-income countries with larger foreign capital stock in 1980 had lower economic growth over the next 39 years. The estimations also indi- cate that these economies developed a less specialized export basket, which became relatively more concentrated in low-tech goods. The results are inverted to high-income economies, for which the effects are positive on GDP growth and export specialization and complexi- fication. The results are in line with the …
The Impact Of Ride-Hailing Services On Public Transportation Use: A Discontinuity Regression Analysis, Nicole Sadowsky, Erik Nelson
The Impact Of Ride-Hailing Services On Public Transportation Use: A Discontinuity Regression Analysis, Nicole Sadowsky, Erik Nelson
Economics Department Working Paper Series
Since 2011, the private ride-hailing companies Uber and Lyft have expanded into more and more US cities. We use regression discontinuity design to examine the impact of Uber and Lyft’s entry on public transportation use in the US’ largest urban areas. In most cases, entry into cities by the two ride-hailing companies was staggered: Uber entered first followed some months later by Lyft. We find that public transportation use increased in an urban area, all else equal, immediately following the first entry. However, we find that the spike in public transportation use after first entry disappeared following the entry of …