Local Projections for Applied Economics

Òscar Jordà ()
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Òscar Jordà: Department of Economics, University of California, Davis, California, USA

Annual Review of Economics, 2023, vol. 15, issue 1, 607-631

Abstract: The dynamic causal effect of an intervention on an outcome is of paramount interest to applied macro- and microeconomics research. However, this question has been generally approached differently by the two literatures. In making the transition from traditional time series methods to applied microeconometrics, local projections can serve as a natural bridge. Local projections can translate the familiar language of vector autoregressions and impulse responses into the language of potential outcomes and treatment effects. There are gains to be made by both literatures from greater integration of well-established methods in each. This review shows how to make these connections and points to potential areas of further research.

Keywords: local projections; vector autoregressions; panel data; potential outcomes (search for similar items in EconPapers)
JEL-codes: C22 C23 C32 C33 E47 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1146/annurev-economics-082222-065846

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