Identification with Imperfect Instruments

Aviv Nevo and Adam Rosen

No 14434, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Dealing with endogenous regressors is a central challenge of applied research. The standard solution is to use instrumental variables that are assumed to be uncorrelated with unobservables. We instead assume (i) the correlation between the instrument and the error term has the same sign as the correlation between the endogenous regressor and the error term, and (ii) that the instrument is less correlated with the error term than is the endogenous regressor. Using these assumptions, we derive analytic bounds for the parameters. We demonstrate the method in two applications.

JEL-codes: C30 C31 C33 (search for similar items in EconPapers)
Date: 2008-10
New Economics Papers: this item is included in nep-ecm
Note: IO PR TWP
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published as Aviv Nevo & Adam M. Rosen, 2012. "Identification With Imperfect Instruments," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 659-671, August.

Downloads: (external link)
http://www.nber.org/papers/w14434.pdf (application/pdf)

Related works:
Journal Article: Identification With Imperfect Instruments (2012)
Working Paper: Identification with imperfect instruments (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:14434

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w14434

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().