Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 1/2013: Identification in Models with Discrete Variables.

Lukas Laffers ()
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Lukas Laffers: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: This paper provides a new simple and computationally tractable method for determining an identified set that can account for a broad set of economic models when economic variables are discrete. Using this method it is shown on a simple example how can imperfect instruments affect the size of the identified set when strict exogeneity is relaxed. It could be of great interest to know to what extent are the results driven by the exogeneity assumption which is often a subject of controversy. Moreover, flexibility gained from the new proposed method suggests that the determination of the identified set need not be application-specific anymore. This paper presents a unifying framework that approaches identification in an algorithmic way.

Keywords: Identification; Models; Discrete Variables.

JEL-codes: C10; C21; C26; C61

38 pages, January 8, 2013

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