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Plausibly Exogenous

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Author Info

  • Timothy G. Conley

    (Graduate School of Business, University of Chicago)

  • Christian B. Hansen

    (Graduate School of Business, University of Chicago)

  • Peter E. Rossi

    (Graduate School of Business, University of Chicago)

Abstract

Instrumental variable (IV) methods are widely used to identify causal effects in models with endogenous explanatory variables. Often the instrument exclusion restriction that underlies the validity of the usual IV inference is suspect; that is, instruments are only plausibly exogenous. We present practical methods for performing inference while relaxing the exclusion restriction. We illustrate the approaches with empirical examples that examine the effect of 401(k) participation on asset accumulation, price elasticity of demand for margarine, and returns to schooling. We find that inference is informative even with a substantial relaxation of the exclusion restriction in two of the three cases. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 94 (2012)
Issue (Month): 1 (February)
Pages: 260-272

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Handle: RePEc:tpr:restat:v:94:y:2012:i:1:p:260-272

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  1. Plausibly Exogenous
    by Liam Delaney in Economics and Psychology Research on 2012-05-12 16:21:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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  1. Cory Koedel & Mark Ehlert & Eric Parsons & Michael Podgursky & P. Brett Xiang, 2014. "Selecting Growth Measures for School and Teacher Evaluations," Working Papers 1401, Department of Economics, University of Missouri.
  2. Dincecco, Mark & Prado, Mauricio, 2012. "Warfare, Fiscal Capacity, and Performance," MPRA Paper 39264, University Library of Munich, Germany.
  3. Raphael A. Auer, 2012. "Geography, Institutions, and the Making of Comparative Development," CESifo Working Paper Series 3874, CESifo Group Munich.
  4. Jan F. Kiviet, 2013. "Identification and inference in a simultaneous equation under alternative information sets and sampling schemes," Econometrics Journal, Royal Economic Society, vol. 16(1), pages S24-S59, 02.
  5. Kalb, G. & Ours, J.C. van, 2013. "Reading to Young Children: A Head-Start in Life?," Discussion Paper 2013-029, Tilburg University, Center for Economic Research.
  6. repec:cge:warwcg:172 is not listed on IDEAS
  7. Juan Carlos Escanciano & Lin Zhu, 2013. "Set inferences and sensitivity analysis in semiparametric conditionally identified models," CeMMAP working papers CWP55/13, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  8. Xu Cheng & Zhipeng Liao, 2012. "Select the Valid and Relevant Moments: A One-Step Procedure for GMM with Many Moments," PIER Working Paper Archive 12-045, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  9. Wantchekon, Leonard & Garcia-Ponce, Omar, 2013. "Critical Junctures: Independence Movements and Democracy in Africa," CAGE Online Working Paper Series 173, Competitive Advantage in the Global Economy (CAGE).
  10. Lennart Hoogerheide & Joern H. Block & Roy Thurik, 2010. "Family Background Variables as Instruments for Education in Income Regressions: A Bayesian Analysis," Tinbergen Institute Discussion Papers 10-075/3, Tinbergen Institute.
  11. Spenkuch, Jörg & Tillmann, Philipp, 2014. "Elite Influence? Religion, Economics, and the Rise of the Nazis," MPRA Paper 54909, University Library of Munich, Germany.
  12. Dang, Duc Anh, 2013. "How foreign direct investment promote institutional quality: Evidence from Vietnam," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1054-1072.
  13. Asha Abdel Rahim & Dany Jaimovich & Aleksi Ylönen, 2013. "Forced displacement and behavioral change: An empirical study of returnee households in the Nuba Mountains," HiCN Working Papers 157, Households in Conflict Network.
  14. repec:dgr:uvatin:2012128 is not listed on IDEAS
  15. Green, Colin P. & Navarro-Paniagua, María & Ximénez-de-Embún, Domingo P. & Mancebón, María-Jesús, 2014. "School choice and student wellbeing," Economics of Education Review, Elsevier, vol. 38(C), pages 139-150.

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