Econometrics B: L7 Flashcards Preview

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Flashcards in Econometrics B: L7 Deck (6)
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1
Q

Read example 1: colonial origins of development

A

now

2
Q

What did paper 1 seek to find out?

A

about the casual effect between economic institutions and LR economic performance

3
Q

Explain how institutions are endogenous to economic performance?

A
  • Causality runs both ways (eg. poor countries lack resources to build institutions)
  • Omitted variable bias (eg. history/geography of country may lead to both economic institutions and economic performance)
4
Q

Explain the problem encountered in paper 1 and how it was overcome?

A

The regression including R (institutions) as an explanatory variable couldn’t be used since R is endogenous, tf need a variable that fulfills both criteria; relevance and exogenity
They proposed using z, settler mortality because Europeans faced very high death rates compared with locals (see notes for full explanation)

5
Q

See example 2: fulton fish market

A

now

6
Q

What is simultaneity?

A

When one or more of the explanatory variables is jointly determined with the dependent variable (type of endogeneity of explanatory variables, third type is measurement error)