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 ...
- 16.3k
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 ...
- 15.8k
10
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
$$\frac{x_i}{x_j} = \left( \frac{\alpha_i}{\alpha_j}\frac{p_j}{p_i} \right)^\sigma $$
...
- 3,481
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 ...
- 8,487
8
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 $$\ln(F)=a\ln(L)+b\ln(K).$...
- 983
8
votes
Citing non-economics studies in an economics research paper
There seem to be two things:
The first is that "perceived value" is not something that directly corresponds to something economists usually study. It might be related to, say, marriage ...
- 13.5k
8
votes
Accepted
What are the main differences among xtreg, areg, reghdfe?
xtreg
xtreg is a general command for panel regression. The panel regressions will have the following general form (see stata manual):
$$y_{it} = α + \mathbf{x_{it}β}...
- 57.7k
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 ...
- 12.5k
7
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 ...
- 245
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^\...
- 16.3k
7
votes
Accepted
Conditional Convergence
Let me clarify the concepts of absolute and conditional convergence:
The hypothesis that poor economies tend to grow faster per capita than rich ones without conditioning on any other characteristics ...
- 1,262
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 ...
- 6,990
6
votes
Estimating CES utility (not production) function parameters
In this comment I simply show that
Under certain assumptions the problem is not an estimation problem, there is an exact solution for $\sigma$ and a solution for the structural errors $\alpha_i$ up ...
- 3,798
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 ...
- 9,355
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)...
- 2,619
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 "...
- 12.5k
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 ...
- 12.5k
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 ...
- 3,798
6
votes
Derivation of index decomposition analysis
Unfortunately the paper is behind a paywall, so the answer is based entirely on your question.
What is done under the hood to get the result is a rather straight forward log-linearisation and, hence, ...
- 1,652
6
votes
Accepted
Log Transformation of Zeros (Slave Trade Data)
Taking the logarithm of $0$ is impossible. This is a frequent occuring problem with econometricians who insist on using the log transform while having data with (many) zeros.
There are a few options, ...
- 12.5k
5
votes
Accepted
The Econometrics of the Stone Geary Production function
Stone-Geary production functions attempt to reflect the real-world observation that for production to be feasible, there exist minimum thresholds in the quantities of inputs employed. This is not ...
- 33.9k
5
votes
Estimating CES utility (not production) function parameters
These other answers seem to be citing some methods I haven't quite heard about yet however they all touch upon the idea developed by Czech economist named Jan Kmenta which has come to be known as the ...
- 8,487
5
votes
Accepted
In VAR models, do variations in the variables come solely from shocks?
My short answer is that if shocks are zero over the whole horizon (history, present, and future) then the variables in a VAR will not move at all, just as in a DSGE. You cannot assume a starting point ...
- 1,652
4
votes
How accurate is duality?
Let me focus on the use of duality theory in demand analysis (as this is what I'm most familiar with).
Direct approach
Usually, in order to obtain a demand system (which you can then estimate) you ...
- 12.5k
4
votes
To use seasonally adjusted data or not seasonally adjust data?
There is a theoretical objection to using seasonally adjusted data, which I saw in an essay by Kalman (developer of the Kalman filter); sorry, I cannot find the reference. The argument is that ...
- 9,907
4
votes
Accepted
Difference between multinomial logit and conditional logit
It would be much better to have at least a head of your dataset to be sure, but from the description conditional logit is the way to go (though, in practice, random coefficients logit should be used ...
- 648
4
votes
Accepted
Difference-in-differences with long time horizon and repeated treatments
This question is related to a post I addressed on CrossValidated. The "generalized" difference-in-differences (DiD) estimator is amenable to settings with multiple groups and multiple ...
- 459
4
votes
Accepted
Synthetic Control Method
There are many ressources available online
Synth is a statistical software that implements synthetic control methods for causal inference in comparative case studies with aggregate data as described ...
- 6,990
4
votes
Accepted
How does one deal with trending variables in Linear Regression?
Depends on a trend. Trends come generally in two categories:
Deterministic trend - this can be controlled for using various methods. For example, in panel regression you could include time fixed ...
- 57.7k
4
votes
Accepted
Applying ensemble modelling to VAR models
Emsemble learning is beneficial in forecasting where statistical adequacy of any model in the ensemble is of limited importance. However, when models are used for inference, statistical adequacy is ...
- 2,385
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