Bayesian Analysis of Structural Effects in an Ordered Equation System

Mingliang Li and Justin Tobias ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: We describe a new simulation-based algorithm for Bayesian estimation of structural effects in models where the outcome of interest and an endogenous treatment variable are ordered. Our algorithm makes use of a reparameterization, suggested by Nandram and Chen (1996) in the context of a single equation ordered-probit model, which significantly improves the mixing of the standard Gibbs sampler. We illustrate the improvements afforded by this new algorithm in a generated data experiment and also make use of our methods in an empirical application. Specifically, we take data from the National Longitudinal Survey of Youth (NLSY) and investigate the impact of maternal alcohol consumption on early infant health. Our results show clear evidence that the health outcomes of infants whose mothers drink while pregnant are worse than the outcomes of infants whose mothers never consumed alcohol while pregnant. In addition, the estimated parameters clearly suggest the need to control for the endogeneity of maternal alcohol consumption.

Date: 2005-02-08
New Economics Papers: this item is included in nep-dcm and nep-ecm
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Citations: View citations in EconPapers (4)

Published in Studies in Nonlinear Dynamics and Econometrics 2006,

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Journal Article: Bayesian Analysis of Structural Effects in an Ordered Equation System (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:12247

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