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Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term

Olena Nizalova () and Irina Murtazashvili

No 37, Discussion Papers from Kyiv School of Economics

Abstract: Whether interested in the differential impact of a particular factor in various institutional settings or in the heterogeneous effect of policy or random experiment, the empirical researcher confronts a problem if the factor of interest is correlated with an omitted variable. This paper presents the circumstances under which it is possible to arrive at a consistent estimate of the mentioned effect. We find that if the source of heterogeneity and omitted variable are jointly independent of policy or treatment, then the OLS estimate on the interaction term between the treatment and endogenous factor turns out to be consistent.

Keywords: treatment effect; heterogeneity; policy evaluation; random experiments; omitted variable bias (search for similar items in EconPapers)
JEL-codes: C21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm
Date: 2011-03
Note: Revised and resubmitted to the Journal of Econometric Methods
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http://repec.kse.org.ua/pdf/KSE_dp37.pdf Revised version, June 2014 (application/pdf)

Related works:
Journal Article: Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term (2016) Downloads
Working Paper: Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term (2012) Downloads
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