Bias in reduced-form estimates of pass-through

Alexander MacKay, Nathan H. Miller, Marc Remer and Gloria Sheu

Economics Letters, 2014, vol. 123, issue 2, 200-202

Abstract: We show that, in general, consistent estimates of cost pass-through are not obtained from reduced-form regressions of price on cost. We derive a formal approximation for the bias that arises even under standard orthogonality conditions. We provide guidance on the conditions under which bias may frustrate inference.

Keywords: Pass-through; Reduced-form regression; Bias (search for similar items in EconPapers)
JEL-codes: F14 F3 F4 L2 L3 L4 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Bias in Reduced-Form Estimates of Pass-through (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:123:y:2014:i:2:p:200-202

DOI: 10.1016/j.econlet.2014.02.017

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