Paul
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What is the difference between two stage least squares and instrumental variable regression?
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6 votes

IV estimators are 2SLS estimators. An IV estimator is the sample analog of the form: $\beta = \frac{Cov(Y, Z)}{Cov(X, Z)}$, where $Y$ is the outcome variable, $X$ is the endogenous variable, and $Z$ ...

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convexity of the profit function for profit maximization
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4 votes

It is true that we are usually interested in minimizing convex functions or maximizing concave functions, typically over convex sets. But I think you have two confusions: The profit function is the ...

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How much is someone willing to pay to own a monopoly?
3 votes

I'm not super clear about the policy here regarding self study questions. I'll give a hint for now. You can translate the question into: finding the present value of a perpetuity, which is the ...

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Why two goods are of different types of Cross Elasticity if we swap them in formula?
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3 votes

The cross elasticity of demand $E_{XY}^D$ is defined as the percent change in quantity demanded for X divided by the percent change in price of Y, holding the price of X fixed. The problem with your ...

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When is an OLS parameter unchanged on a subsample?
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2 votes

Since Q1 has been solved, I'll focus on Q2. Yes, it's possible to remove a sample point that is not on the regression line but still yields $b_{1}=b_{1}'$ and $b_{0}\ne b_{0}'$. Such points have the ...

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Why does a buyer value a dollar in a small purchase (e.g. TV) differently to a dollar in a large purchase (e.g. car)?
2 votes

One explanation from psychology and behavioral economics is "mental accounting": people put different transactions into different mental accounts. When buying a house, people are imaging (probably ...

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What is the term for 'forgone cost' as 'opportunity cost' is for 'forgone profit'?
1 votes

The short answer: we don't need a separate term for "foregone cost", because opportunity cost of doing something = highest (forgone benefit - foregone cost). I'd like to stress two points about ...

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Why are vacancy rate and unemployment rate negatively correlated?
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1 votes

Adopting your notation, the vacancy rate at any given time is defined as $A/Q$. There is no mechanical relationship between the unemployment rate $U/Q$ and vacancy rate (A/Q). They are negatively ...

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Using the Slutsky equation
1 votes

In your context, Slutsky Equation says, after $p_x$ increases from 1 to 4, the following is true: \begin{align*} \text{total demand change in $x$} & \\ = \text{demand change in $x$, keeping $U$ ...

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study question: change of Expenditure in terms of price and quantity
1 votes

Adopting your notations, $E = P \times Q$. Taking natural log for both sides, we have $\log E = \log P + \log Q$. When the percent change of some quantity, $\Delta x / x$, is small, we can ...

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Why are elasticities defined as logarithmic derivatives?
1 votes

First, the interpretation of $\eta=\frac{\partial\log y}{\partial\log x}$ and $\eta'=\frac{\partial y}{\partial x}$ are different. $\eta$ is the ratio of percent change and $\eta'$ is the ratio of ...

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Sample weights in Stata: fweight vs. pweight
1 votes

mean command with pweight gives you mean and sd estimates, which in turn gives you estimate of the coefficient of variation. pctile also takes pweight. It will generate percentiles. kdensity only ...

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What are the causes of increase in productivity of labour?
1 votes

Labor productivity, as measured by output per worker or output per worker hour, is a function of many factors. Let me mention a few in the framework of growth theory. Many economists consider at least ...

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Data Source on US Wage Earnings
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0 votes

For annual individual-level earnings data: From 1962: try Current Population Survey (CPS) https://cps.ipums.org/cps/intro.shtml From 2000, try American Community Survey (ACS) https://usa.ipums.org/...

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Are There Giffen Inputs?
0 votes

Consumer's problem We assume monotone concave utility function, that is, diminishing marginal utilities and binding budget constraint. The first order condition is: $$\frac{P_A}{P_B} = \frac{\text{...

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Averaging data over 5 years with Stata or Excel
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Use the tssmooth ma command. Use the window() option to control time periods to be included in the average. . use http://www.stata-press.com/data/r14/abdata, clear . keep id year wage . quietly keep ...

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