A Note on Testing the LATE Assumptions

Lukas Laffers and Giovanni Mellace

No 4/2015, Discussion Papers on Economics from University of Southern Denmark, Department of Economics

Abstract: In this paper we show that the testable implications derived in Huber and Mellace (2013) are the best possible to detect invalid instruments, in the presence of heterogeneous treatment effects and endogeneity. We also provide a formal proof of the fact that those testable implications are only necessary but not sufficient conditions for instrument validity.

Keywords: Testing IV validity; Local average treatment effect; Moment inequalities; Bounds (search for similar items in EconPapers)
JEL-codes: C12 C21 C26 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2015-03-03
New Economics Papers: this item is included in nep-ecm
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