IDEAS home Printed from https://ideas.repec.org/a/erh/journl/v3y2011i2p1-12.html
   My bibliography  Save this article

A Structural Approach for Testing Causality

Author

Listed:
  • Zahid Asghar

    () (Quaid-i-Azam University)

Abstract

The ever present possibility of confounding factors creates difficulties in identifying causal effects on the basis of observational data. A large number of approaches to resolve this difficulty have been proposed; see Zaman (2010) for a recent survey. One involves using a "natural experiment" where nature acts like an experimenter in changing the setting of a key variable, allowing us to differentiate between "treatment" and "control" observations. This idea has been used by Hendry and Ericsson (1991), Hoover (2001), and Keane (2010) in rather complex settings. This paper presents an elementary version of this structural approach for detecting causality in the simplest possible setting. The structural method is able to detect contemporaneous causality. We illustrate the uses of this technique on a simulated data set, and also apply it to the export-led growth hypothesis for India and energy-growth data for Shanghai.

Suggested Citation

  • Zahid Asghar, 2011. "A Structural Approach for Testing Causality," International Econometric Review (IER), Econometric Research Association, vol. 3(2), pages 1-12, September.
  • Handle: RePEc:erh:journl:v:3:y:2011:i:2:p:1-12
    as

    Download full text from publisher

    File URL: http://www.era.org.tr/makaleler/11080066.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Keane, Michael P., 2010. "Structural vs. atheoretic approaches to econometrics," Journal of Econometrics, Elsevier, vol. 156(1), pages 3-20, May.
    2. Blundell, Richard, 2010. "Comments on: Michael P. Keane 'Structural vs. atheoretic approaches to econometrics'," Journal of Econometrics, Elsevier, vol. 156(1), pages 25-26, May.
    3. Jim Love & Ramesh Chandra, 2005. "Testing export-led growth in South Asia," Journal of Economic Studies, Emerald Group Publishing, vol. 32(2), pages 132-145, May.
    4. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-856, July.
    5. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    6. Jim Love & Ramesh Chandra, 2004. "Testing Export-Led Growth in India, Pakistan and Sri Lanka Using a Multivariate Framework," Manchester School, University of Manchester, vol. 72(4), pages 483-496, July.
    7. Asad Zaman, 2010. "Causal Relations via Econometrics," International Econometric Review (IER), Econometric Research Association, vol. 2(1), pages 36-56, April.
    8. Rust, John, 2010. "Comments on: "Structural vs. atheoretic approaches to econometrics" by Michael Keane," Journal of Econometrics, Elsevier, vol. 156(1), pages 21-24, May.
    9. Wolde-Rufael, Yemane, 2004. "Disaggregated industrial energy consumption and GDP: the case of Shanghai, 1952-1999," Energy Economics, Elsevier, vol. 26(1), pages 69-75, January.
    10. Hoover, Kevin D., 2004. "Lost Causes," Journal of the History of Economic Thought, Cambridge University Press, vol. 26(02), pages 149-164, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:erh:journl:v:9:y:2017:i:2:p:50-68 is not listed on IDEAS

    More about this item

    Keywords

    Structural Causality; Granger Causality; Extra-statistical Information; Export led Growth;

    JEL classification:

    • C - Mathematical and Quantitative Methods
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • C59 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:erh:journl:v:3:y:2011:i:2:p:1-12. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (M. F. Cosar). General contact details of provider: http://edirc.repec.org/data/eratrea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.