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Local projections

Author

Listed:
  • Jordà , Oscar
  • Taylor, Alan M.

Abstract

A central question in applied research is to estimate the effect of an exogenous intervention or shock on an outcome. The intervention can affect the outcome and controls on impact and over time. Moreover, there can be subsequent feedback between outcomes, controls and the intervention. Many of these interactions can be untangled using local projections. This method’s simplicity makes it a convenient and versatile tool in the empiricist’s kit, one that is generalizable to complex settings. This article reviews the state-of-the art for the practitioner, discusses best practices and possible extensions of local projections methods, along with their limitations.

Suggested Citation

  • Jordà , Oscar & Taylor, Alan M., 2024. "Local projections," CEPR Discussion Papers 19378, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:19378
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    File URL: https://cepr.org/publications/DP19378
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    Citations

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    Cited by:

    1. Bellifemine, Marco & Couturier, Adrien & Jamilov, Rustam, 2025. "Monetary unions with heterogeneous fiscal space," Journal of International Economics, Elsevier, vol. 156(C).
    2. Jung, Alexander, 2025. "The quantity theory of money: An empirical analysis for 1870 - 2020," Journal of Macroeconomics, Elsevier, vol. 85(C).
    3. Rahaman, Akeem & Majid, Michelle, 2025. "Storms and sustainability: Assessing the impact of natural disasters on debt sustainability in the Caribbean," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 579-591.
    4. Partsch, Emil Holst & Petrella, Ivan & Santoro, Emiliano, 2026. "Consumer durables and monetary policy according to HANK," Journal of Monetary Economics, Elsevier, vol. 157(C).
    5. Nabil Daher, 2025. "Is growth at risk from natural disasters ? Evidence from quantile local projections," EconomiX Working Papers 2025-9, University of Paris Nanterre, EconomiX.
    6. Emanuele Campiglio & Luca De Angelis & Paolo Neri & Ginevra Scalisi, 2025. "From Climate Chat to Climate Shock: Non‐Linear Impacts of Transition Risk in Energy CDS Markets," Environmetrics, John Wiley & Sons, Ltd., vol. 36(3), April.
    7. Òscar Jordà & Fernanda Nechio & Toan Phan & Felipe Schwartzman, 2026. "Financial Conditions and Capital Investment Choices," Working Paper Series 2026-05, Federal Reserve Bank of San Francisco.
    8. Nabil Daher, 2026. "Is growth at risk from natural disasters? Evidence from quantile local projections," Post-Print hal-05466345, HAL.
    9. Bastien Buchwalter & Francis X. Diebold & Kamil Yilmaz, 2025. "Clustered Network Connectedness: A New Measurement Framework with Application to Global Equity Markets," Papers 2502.15458, arXiv.org, revised Dec 2025.
    10. Philippe Goulet Coulombe & Karin Klieber, 2025. "Opening the Black Box of Local Projections," Papers 2505.12422, arXiv.org, revised Jul 2025.
    11. Salles Andrés Gabriel & Bertholet Nicolás, 2025. "El impacto de las devaluaciones sobre el PIB en América Latina: un análisis para 1993–2004 a partir de Local Projections," Asociación Argentina de Economía Política: Working Papers 4837, Asociación Argentina de Economía Política.
    12. Adarov, Amat & Panizza, Ugo, 2026. "Public investment quality and sovereign risk," Journal of International Money and Finance, Elsevier, vol. 161(C).
    13. Marco Moreno & Simone Cima, 2024. "Monetary policy shocks and their effects across the wealth distribution: evidence from new European data," Trinity Economics Papers tep0524, Trinity College Dublin, Department of Economics, revised Mar 2025.
    14. Alexander Behar, 2011. "Price Discovery and Price Risk Management Before and After Deregulation of the South African Maize Industry," ERSA Working Paper Series 263, Economic Research Southern Africa.

    More about this item

    Keywords

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    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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