Identification of casual effects in linear models: beyond Instrumental Variables

Elena Stanghellini and Eduwin Pakpahan

No 117/2013, Quaderni del Dipartimento di Economia, Finanza e Statistica from Università di Perugia, Dipartimento Economia

Abstract: The Instrumental Variable (IV) formula has become widely used to address the issue of identification of a causal effect in linear systems with an unobserved variable that acts as direct confounder. We here propose two alternative formulations to achieve identification when the assumptions underlying the use of IV are violated. Parallel to the IV, the proposed formulas exploit the conditional independence structure of a Directed Acyclic Graph and can be obtained via a series of univariate regressions, a feature that renders the results particularly attractive and easy to implement.

Keywords: Causal Effect; Confounder; Directed Acyclic Graph; Latent Variable; Regression Graph; Structural Equation Model; Identification; Structural Equation Model (search for similar items in EconPapers)
JEL-codes: C18 C31 C36 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-05-02
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Journal Article: Identification of causal effects in linear models: beyond instrumental variables (2015)
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