Endogeneity Testing in a Supply and Demand Framework
The powers of Wu-Hausman endogeneity tests are related to the normalization d ecision in estimating demand equations. Power is not invariant to the choice bet ween quantity and price as the dependent variable. A theoretical result due to N akamura and Nakamura_(1984) is used to explore the dependence of power on parame ters of the supply and demand system. The theoretical result is corroborated wit h a Monte Carlo experiment. The power results are used to analyze the U.S. deman d for poultry meat wherein price, but not quantity, is found to be predetermined Copyright 1986 by MIT Press.
Volume (Year): 68 (1986)
Issue (Month): 4 (November)
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