Questions tagged [endogeneity]
The endogeneity tag has no usage guidance.
34
questions
0
votes
0
answers
20
views
Different estimates from 2SRI and fixed effects regression. is this endogeneity?
I am comparing two different models to resolve potential endogeneity concerns in my empirical models. First, I ran fixed-effects models without handling any endogeneity concerns, and I got significant ...
0
votes
1
answer
16
views
How to control for prices when they are endogenously set by hospitals?
Basically, I want to see how changes in hospital prices for a certain procedure can be used to predict quality of treatment. Problem is in my sample, the private hospitals are price makers so any ...
- 1
0
votes
2
answers
231
views
Decoding Endogenous vs Exogenous - Parameter vs Decision Variable - and Independent vs Dependent
this is a topic that i feel is very implicit in a lot of economics, but is some times brushed over in interest of getting strait to the model or the maths. But often i realise i don't actually know ...
- 899
2
votes
1
answer
98
views
Omitted Variable Bias with interaction terms
Suppose we have the long regression
$$ y = \alpha + \beta D + \gamma X + \varepsilon $$
but instead use the short regression
$$ y = \alpha + \beta D + \varepsilon $$
then one can show that the OLS ...
- 1,781
1
vote
1
answer
50
views
Simultaneity intuition for correlated error terms
I'm reading through Asymptotic Theory for Econometricians by Halbert White and am trying to figure out the intuition for situations where the errors would be correlated.
Here's the setup:
$Y_{t1} = Y_{...
0
votes
1
answer
115
views
Endogenous growth model with externalities
I have a following model of endogenous growth where each firm has the following technology;
$$y_t=AK_t^{1-\alpha} k_t^{\alpha} n_t^{1-\alpha}$$
The production function above defines an externality. I ...
- 120
0
votes
2
answers
42
views
Technology as an endogenous economic variable
Most of the economic literature on technical progress either treats it as an exogenous variable, often as a stochastic shocks or without specifying the origin of technological progress.
On the other ...
- 288
2
votes
1
answer
51
views
Can missing data cause endogeneity problem?
I am a econometrics newbie. I would like to ask a question. In the standard Hausman Taylor model, we need to specify exogeneous/endogenous variables for estimation.
See: https://kb.iu.edu/d/bcfo
...
- 35
0
votes
1
answer
55
views
When can I assume that a variable is exogenous?
I'm looking for the effect of nutritional coffee breaks on MBA performance, and I found that the change to a healthier catering increased the performance of MBA students. Additionally, I want to see ...
- 1
2
votes
1
answer
49
views
Instrumental variable analysis for non-linear endogenous variable
I have a model of the form $$y_i = ax_{1i} + bx_{1i}^2 + cx_{3i} + \varepsilon_i$$ Where $x_1$ is an endogenous variable. Would I need instruments for both $x_1$ and $x_1^2$ or do I only need to ...
- 23
2
votes
0
answers
31
views
Is it okay to combine two control variables into one in order to get a more precise estimate of the coefficient on the main explanatory variable?
I am studying a natural experiment that resulted in some cities randomly receiving different numbers of competitors in a certain sector. (Stores applied for licenses in a government-run lottery.) In ...
- 333
1
vote
1
answer
53
views
What is the example of inaccurate impact due to endogeneity?
When learning about endogenous variable, I found an answer in a topic on StackExchange very direct:
An Exogenous Variable is defined as a variable which is unaffected by
other variables within an ...
- 1,090
1
vote
1
answer
65
views
What does "endogeneity of the industry structure" means?
Dong,2019,page 899 documented that:
We estimate Export Market Leniency Laws as the weighted average of the passage of leniency
programs in all other countries, excluding the country in which the firm ...
- 1,090
3
votes
0
answers
58
views
Predicting covariates into "observed" and "unobserved" part
I recently saw a paper where they run a regression of the covariate of interest $X_{1}$ on the outcome $Y\in\{0,1\}$ without further controls
$$
Y = \alpha_{1} + \beta_{1} X_{1} + \epsilon_{1} \tag{1}...
- 1,781
4
votes
1
answer
207
views
Is this an an endogeneity/simultaneity problem?
I would like to know if the logic in these two situations is correct.
Situation 1: Let's say we have a continuous dependent variable, $y_1$, that then has a causal impact on an unobserved variable, $\...
1
vote
0
answers
27
views
Is this an endogeneity problem?
Let's say we want to determine the impact of $y_2$ on $y_1$, which are related as follows:
$$y_1 = f(y_2, x_1,e)$$
where
$$e = g(y_3,x_2, u_1), \space y_2 = h(y_4,x_3, u_2), \space y_3 = m(y_4, x_4,...
1
vote
1
answer
168
views
Using dependent variable's and exogenous variables' lags as instruments in 2SLS
Suppose we have the following structural equations:
$$y=\beta_0+\beta_1x+\beta_2z_z+\beta_3z_3+\epsilon,$$
where $x$ is the endogenous variable and $z_1,z_2$ are exogenous variables. In the literature,...
- 111
2
votes
0
answers
78
views
Intuition behind the Endogeneity Test (the Hausman Test)
Suppose we have the following simple regression model (time series framework)"
$$y_1=\beta_0+\beta_1 y_2+\beta_2 z_1 +\beta_3 z_2 +u,$$
where $z_1$ and $z_2$ are exogenous and $y_2$ is either ...
- 111
4
votes
2
answers
204
views
is endogeneity a problem in the first-stage regression in a two-stage least square regression?
We have this model:
$$D=\alpha_1+\gamma_1 Z + \epsilon_1$$
$$Y=\alpha_2+\gamma_2 D + \epsilon_2$$
Notations are as usual: Y is the outcome, D is the treatment, Z is the instrument
Two conditions for ...
- 141
3
votes
2
answers
206
views
Some confusions about instrumental variable (econometrics)
As the title says, I have some confusions about instrumental variable.
According to my lecture note (which is supposed to be reliable), instrumental variable has two big properties:
Validity: an ...
1
vote
1
answer
59
views
Why do we treat demographic variables as being exogenous?
I I would like to ask about demographic variables.
In general, we usually include those variables as independent variables when we run regressions such as wage equation or test score equation.
What ...
- 11
1
vote
0
answers
153
views
The rationale for using a lagged variable to address endogeneity arising from simultaneous causation?
when there is simultaneous causation between dependent and independent variables often in papers we see a lagged variable being used in place of contemporaneous variable. For example, Clemens, ...
2
votes
0
answers
45
views
If an endogenous explanatory variable is serially correlated does it mean that its lags are also endogenous?
in panel data when examining economic growth determinants lags are often used to account for endogeneity of explanatory variables. However if the explanatory variable is serially correlated, does it ...
0
votes
1
answer
155
views
Endogeneity problem with a dummy variable
I have a panel data model as following,
$$Y_{it}=intercept +B_1X_{it}+B_2Q_{it}+error_{it}$$
where $i$ is for firm and $t$= time.
$Y$= trade credit demand, $X$= inventory cycle, as inventory ...
1
vote
1
answer
61
views
Justification for my Random Effects estimation
I need to defend my use of the Random Effects (RE) estimator in my economics project. I've been told in cross validated that the proper place for the question is here.
The causal effect of the ...
- 329
3
votes
1
answer
119
views
Can all the regressors be endogenous in a given model?
I'm trying to estimate the following model:
Labor demand=f(wages,lagged labor demand, GFCF, GDP, trade share, labor productivity, real exchange rate)... (1)
Wages= f(labor demand,lagged wages, GFCF, ...
- 31
5
votes
1
answer
2k
views
Confounding versus endogenous variables. What is their relative hierarchical position?
There are valuable resources on the lexicon of types of variables quickly accessible, such as here. However, some of these concepts appear side-by-side often enough to make them confusing.
For ...
- 151
4
votes
3
answers
176
views
Does endogeneity matter when neither independent variable nor error term are correlated with dependent variable?
if the double arrows show that X and the error term are correlated, but that neither variable affects Y, is endogeneity a problem in this scenario? Why or why not?
- 41
2
votes
2
answers
555
views
Testing for Endogeneity
I apologize if this question is very basic. I have the following plain vanilla Instrumental Variable model.
$Y=\alpha+X\beta+\varepsilon$
$X=\delta+Z\gamma+\eta$
$\varepsilon\perp\eta,\quad Z\perp\...
- 678
2
votes
0
answers
64
views
Addressing endogenity in price elasticity and the Promotion Optimization Problem
I have data on
purchases
gross prices
discounts (like coupons)
net prices (i.e. gross price - discounts)
number of leads (potential customers at any given time)
conversion rates (# purchases / # ...
- 380
1
vote
0
answers
485
views
How to test if variables are jointly determined?
If I wanted to test, for example, if consumption growth and credit growth are jointly determined, and therefore justifying the use of instrumental variables, how would I go about this? Would running a ...
- 11
2
votes
1
answer
269
views
Count panel models for endogenous regressors
I have a count variable as the dependent variable and several continuous regressors on the RHS. The dependent variable and some regressors are supposed to be endogenous to unobserved factors. I have a ...
- 21
2
votes
0
answers
34
views
Sources of the endogeneity of money in New Keynesian economics (Woodford)
I am trying to wrap my head around Woodford's "Interest and Prices" so I have a question regarding the source of the endogeneity of the money supply in his models.
The Post Keynesian view is that ...
- 21
5
votes
1
answer
211
views
Selection bias - Will multiple regressions solve the problem?
Now I have a data from an African country concerning (i) levels of corruption across public sectors and (ii) perceptions of service quality from households (bad, medium and high). The data consist two ...
- 231