Resurgence of the endogeneity-backed instrumental variable methods

Qin, Duo

Resurgence of the endogeneity-backed instrumental variable methods

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), 2015, vol. 9, No 2015-7, 35 pages

Abstract: This paper investigates the nature of the IV method for tackling endogeneity. By tracing the rise and fall of the method in macroeconometrics and its subsequent revival in microeconometrics, it pins the method down to an implicit model respecification device-breaking the circular causality of simultaneous relations by redefining it as an asymmetric one conditioning on a non-optimal conditional expectation of the assumed endogenous explanatory variable, thus rejecting that variable as a valid conditional variable. The revealed nature explains why the IV route is popular for models where endogeneity is superfluous whereas measurement errors are of the key concern.

Keywords: endogeneity; instrumental variables; simultaneity; omitted variable bias; multicollinearity (search for similar items in EconPapers)
JEL-codes: B23 C13 C18 C50 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://dx.doi.org/10.5018/economics-ejournal.ja.2015-7
https://www.econstor.eu/bitstream/10419/107701/1/819290785.pdf (application/pdf)

Related works:
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:zbw:ifweej:20157

DOI: 10.5018/economics-ejournal.ja.2015-7

Access Statistics for this article

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020) is currently edited by Dennis J. Snower

More articles in Economics - The Open-Access, Open-Assessment E-Journal (2007-2020) from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().