14 votes

How much do second-hand good purchases affect first-hand demand?

Coase (1972) has a classic treatments of this issue for monopolists selling durable goods. The general idea is that if Alice sells a textbook to Bob, Bob can resell it to Charlie when he is done with ...
  • 16k
12 votes
Accepted

Citing non-economics studies in an economics research paper

As long as the main results/conclusions of your paper don't rely solely on the non-economics literature you cite, you should be okay. In other words, it's perfectly fine to use non-economics ...
  • 14.7k
11 votes
Accepted

What does it mean to make an identification assumption?

Identifying assumption: assumptions made about the DGP that allows you to draw causal inference. E.g. exogeneity assumption for IV, parallel trends assumption in diff-in-diff. Identifying assumptions ...
  • 2,579
9 votes
Accepted

Cobb-Douglas production function with expenditures rather than units

Sure you can, just that your interpretation of your variables in your analysis changes however. In this case you are analyzing how investment in differing factors of production affect output. I'd ...
  • 7,880
8 votes
Accepted

What are some good repositories for economic data

Be more specific on what you need. Quandl would be a pretty general source which hasn't been mentioned yet. For macro data the St. Louis Fed is pretty good and thorough. Eurostat for European data. ...
8 votes

Citing non-economics studies in an economics research paper

There seem to be two things: The first is that "perceived value" is not something that directly corresponds to something economists usually study. It might be related to, say, marriage ...
8 votes
Accepted

Including an endogenous covariate in a regression model as a control to estimate the effect of another variable of interest

If I include $z_1$ in the model, like this: $$ > y = \beta_0 + \beta_1 x + \beta_2 z_1 + e, > $$ Does that mean that $\beta_1$ is predominantly capturing the effect of $z_2$? Yes. This can be ...
  • 8,652
7 votes
Accepted

How do we estimate production functions?

The following is the basic idea if we are to estimate the parameters by linear regression. Take the natural log of the production function $F(L,K)=L^aK^b$, you will then get $$\ln(F)=a\ln(L)+b\ln(K).$...
  • 923
7 votes
Accepted

Estimating CES utility (not production) function parameters

It may be interesting to exploit the homothetic separability of the CES utility function in $x$. It implies that $$\frac{x_i}{x_j} = \left( \frac{\alpha_i}{\alpha_j}\frac{p_j}{p_i} \right)^\sigma $$ ...
  • 2,691
7 votes

Cobb-Douglas production function with expenditures rather than units

If prices are constant then quantities are proportional to expenditures. Consider : $$ Y=AK^{\alpha}L^{\beta} = A(\frac{E_{K}}{r})^{\alpha}(\frac{E_{L}}{w})^{\beta} $$ $$ = (\frac{A}{r^\alpha w^\...
  • 16k
6 votes
Accepted

How should one determine the proper number of lags in a time series regression?

I don't have advice specific to error correcting model (ECM) setting, but in undergraduate applied econometric class they gave us the generic advice to continue to extend lags in the model until the ...
  • 16k
6 votes
Accepted

Difference-in-differences in 2SLS regression

Well, if you believe that treatment is endogenous (which depends on the problem at hand here and is not an inherent feature of the model), then using eligibility as an instrumental variable will help ...
6 votes

Is a hedonic regression a reduced-form?

In the benchmark hedonic price analysis, we assume a utility function of the general form $$U = U(x, z_1,...,z_n)$$ where "$x$" stands for the composite good, and $(z_1,...,z_n)$ are the ...
6 votes
Accepted

What is a good proxy for government quality?

Using corruption is part of it but a bit restrictive way to measure government "quality". You may use aggregate indicators as the one developed by the Worldwide Governance Indicators (WGI) project ...
  • 6,672
6 votes
Accepted

Is there empirical evidence on usability of Cobb-Douglas production function?

The simple answer to why the Cobb-Douglas functional form is used is because it is at least a log-linear approximation to some higher-order production function. That is, suppose you take a functional ...
  • 9,165
6 votes

Identifying assumption meaning

"Identification" is the most loaded term in econometrics. There are multiple cheap talk equilibria with regard to its meaning. It is used with different intended (but related and overlapping)...
  • 2,579
6 votes
Accepted

Why we need at least 40 groups to be properly clustered?

First of all, clustering only changes the (estimated) standard deviations of your coefficients. Whether you cluster or not will not change the coefficients themselves and therefore also not the "...
  • 8,652
6 votes
Accepted

Why the larger the sample, the lower standard deviation?

Intuitively, variables that only vary at the group level should have a lower variance (and therefore lower standard deviation) than comparable variables that vary at the individual level. As these ...
  • 8,652
6 votes
Accepted

From conceptual framework to econometric estimation

Use non-parametric regression. A particular version that comes to mind is local linear regression. This can be written as $$Y_i = \beta_{0i} + \beta_{1i}X_i + \epsilon_i,$$ thereby allowing for ...
  • 3,196
5 votes

What does it mean to make an identification assumption?

Maybe another example will help here: Imagine you would like to know the effect of smoking on the probability of getting cancer. By simply comparing cancer rates of smokers and non-smokers you might ...
  • 61
5 votes

Are there conventions in economics for coding the distance between states?

I think the answer depends on who is impacted by your measure of distance and for what purpose. Kennan and Walker (2011) Econometrica measure distance between states as "the great circle distance ...
  • 250
5 votes

What are some good repositories for economic data

The Bureau of Economic Analysis (BEA) is the primary source for US economic data. Other US sources include the Dept of Labor, The Census Bureau, Dept of Commerce, and the US Energy Information ...
5 votes
Accepted

Dealing with Missing Data when Testing the CAPM

Easiest fix: if you're worried about it you should value weight your results. This is suggest by, for instance, Kothari, Shanken and Sloan (1995). Firms that are delisted tend to have extremely small ...
  • 2,016
5 votes
Accepted

How to interpret "scale efficiency" in DEA?

First of all, let me tell you that you're doing great. I remember that, being a non-parametric method, it was more difficult for me to understand even the simplest things of DEA. Now, your ...
5 votes
Accepted

Omitted variables in gravity model

The omitted variable bias in gravity model is an important issue given that some factors are unobserved or difficult to quantity. To solve this issue trade economists tend to rely on various fixed ...
  • 6,672
5 votes

Estimating CES utility (not production) function parameters

This answer closely follows the logic of estimation of translog cost function presented in Section 4.7 of Fumio Hayashi's "Econometrics". Define for convenience the CES aggregate price index ...
5 votes
Accepted

What are the main differences among xtreg, areg, reghdfe?

xtreg xtreg is a general command for panel regression. The panel regressions will have the following general form (see stata manual): $$y_{it} = α + \mathbf{x_{it}β}...
  • 45.1k
4 votes

BLP using micro data

Yes, the same authors Berry, Levinsohn, Pakes have written a second paper that uses both macro and micro data to estimate demand for automobiles as a function of the characteristics of the car. "...
4 votes

Bayesian vs. Frequentist Approach

This is a more "practical" answer, vs a deeper theoretical one, or even a specific one. Take it as "a broad answer to a broad question." Also, since it is a "Bayes vs frequentist" issue, at least ...
  • 1,048
4 votes
Accepted

Papers with insignificant results

This does not directly answer your question, but I will try to explain why I don't think that such well known papers exist. If submitted I don't think that such a paper would be accepted by the top ...
  • 27.2k

Only top scored, non community-wiki answers of a minimum length are eligible