Econometrics

The Rise of Behavioral Econometrics..

The lessons from behavioral economics have ameliorated social wellbeing and economic success in recent years. Academics and policymakers now recognize that integrating how individuals behave and make decisions in real-life dramatically improves the effectiveness of public policies and the validity of simple theoretical models. Thus, this area of research has enhanced our understanding of the …

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Investigating Non-linear relationships with curvefit using Stata

While modelling specific phenomenon’s in economics, sometimes we might encounter a functional form which may not be linear in the explanatory variables. Assuming, that we still have linearity in the estimators, we have the capability to include in the regression, variables with powers. As an example, consider the following model: The last equation presents the …

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Box-Pierce Test of autocorrelation in Panel Data using Stata.

The test of Box & Pierce was derived from the article “Distribution of Residual Autocorrelations in Autoregressive-Integrated Moving Average Time Series Models” in the Journal of the American Statistical Association (Box & Pierce, 1970). The approach is used to test first-order serial correlation, the general form of the test is given the statistic as: Where …

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Ramsey RESET Test on Panel Data using Stata

In regression analysis, we often check the assumptions of the econometrical model regressed, during this, one of the key assumptions is that the model has no omitted variables (and it’s correctly specified). In 1969, Ramsey (1969) developed an omitted variable test, which basically uses the powers of the predicted values of the dependent variable to …

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How to Design a Novel Replicative Study?

“A replication study attempts to validate the findings of a published piece of research. By doing so, that prior research is confirmed as being both accurate and broadly applicable” A replication process generally consists of two parts. The first part is concerned with reproducing key findings from the original study. If this step was successful, …

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