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Introduction to instrumental variables

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Introduction to instrumental variables .[embedded content] Great presentation, but maybe Angrist  should also have pointed out the mistake many economists do when they use instrumental variables analysis and think that their basic identification assumption is empirically testable. It is not. And just swapping an assumption of residuals being uncorrelated with the independent variables with the assumption that the same residuals are uncorrelated with an instrument doesn’t solve the endogeneity problem or improve our causal analysis.

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Introduction to instrumental variables

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Great presentation, but maybe Angrist  should also have pointed out the mistake many economists do when they use instrumental variables analysis and think that their basic identification assumption is empirically testable. It is not. And just swapping an assumption of residuals being uncorrelated with the independent variables with the assumption that the same residuals are uncorrelated with an instrument doesn’t solve the endogeneity problem or improve our causal analysis.

Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

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