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Local Projections for Applied Economics

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  • Òscar Jordà

Abstract

The dynamic causal effect of an intervention on an outcome is of paramount interest to applied macro- and micro-economics research. However, this question has been generally approached differently by the two literatures. In making the transition from traditional time series methods to applied microeconometrics, local projections can serve as a natural bridge. Local projections can translate the familiar language of vector autoregressions (VARs) and impulse responses into the language of potential outcomes and treatment effects. There are gains to be made by both literatures from greater integration of well established methods in each. This review shows how to make these connections and points to potential areas of further research.

Suggested Citation

  • Òscar Jordà, 2023. "Local Projections for Applied Economics," Working Paper Series 2023-16, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:96482
    DOI: 10.24148/wp2023-16
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    References listed on IDEAS

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    Keywords

    local projections; vector autoregressions; panel data; potential outcomes;
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