Seminar Vol. 100

Topic: 21st Century IV: Extending the Scope of Incomplete Models

Speaker: Professor Andrew Chesher, UCL

Time: June 1st , 2018 10:30–12:00pm

Venue: Conference Room 106B, Zhonghui Building (College of Economics, JNU)

Abstract:

Incomplete models can deliver robust inference about relevant economic magnitudes. In contrast assumption-heavy complete models are unfocussed, they can be sensitive to misspecification and they can exhibit disappointing performance in practice. 

Since the 1930’s Instrumental Variable (IV) methods have been the main tool employed in identification and estimation of incomplete models. But 20th century IV methods have not been applicable to 21st century models of choice and strategic interaction and other processes in which it is desirable to admit flexible forms of across-individual heterogeneity.

Chesher and Rosen (Econometrica, 2017) introduces Generalized IV Models which extend the scope of IV methods to cover these cases. This lecture motivates and exposits this extension and illustrates with an application to a model of female labour force participation.