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MSc Economic Policy Methods Seminar
MSc Economic Policy Methods SeminarLecture 3: Assessing three papers
Dr John McDonagh
November 10, 2015
MSc Economic Policy Methods Seminar
Introduction
Aims of today - general
I Look at three papers from each of your modules.
I Take some lessons on both methodology andpresentation for your own work.
I All three published so would have gone through a robustreferee process (see attached referee guide.)
I Hindsight can be great! New datasets and methodologiesdo become subsequently available.
MSc Economic Policy Methods Seminar
Introduction
Three papers today
I Competition and regulation Grabowski, David C., andMichael A. Morrisey. ”Do higher gasoline taxes savelives?” Economics Letters 90.1 (2006): 51-55.
I Money banking Frain, John C. ”Inflation and moneygrowth: evidence from a multi-country dataset.” TheEconomic and Social Review 35.3 (2004): 251-266.
I Evaluation Mayor, Karen, et al. ”A Hedonic Analysis ofthe Value of Rail Transport in the Greater Dublin Area.”Journal of Transport Economics and Policy (JTEP) 46.2(2012): 239-261.
MSc Economic Policy Methods Seminar
Introduction
Different types of economic papers.
I The key difference between different types of paper ishow they try to answer the research question.
1. Theoretical2. Empirical3. Theoretical + empirical
MSc Economic Policy Methods Seminar
Introduction
Key questions for assessing empirical papers
1. Is the research question clearly set out? (Test: can Iexplain to a non-economist?)
2. Is the dataset fully described (including any weaknesses).
3. Are there any glaring econometric issues? An omittedvariable? Is reverse causality ignored etc..
4. Are the results adequately described? Readers shouldn’tbe left wondering “did they test for this, try this?”
5. Is the research question answered? Is the paper put incontext of the literature? Is future research set out?
MSc Economic Policy Methods Seminar
Introduction
Recap on possible econometric problems - lecture 1
I Some of these are serious and cause bias:
I Reverse casualty.I Omitted variables.I Errors-in-variables.
I Others affect efficiency and can be handled moremechanically:
I Heteroskedasticity.I Autocorrelation.
I Others are a fact of economic life and have to be dealtwith as best we can:
I Multicollinearity (unless extreme)I Outliers in the data.
MSc Economic Policy Methods Seminar
Paper I
Grabowski, David C., and Michael A. Morrisey.
”Do higher gasoline taxes save lives?” (2006)
MSc Economic Policy Methods Seminar
Paper I
Features on Paper 1
I Power of panel data and “unobserved heterogeneity.”
I Use of time dummies allows for “time specific” factors tobe controlled for.
I Importance of capturing omitted variables (even in paneldata).
I Short and concise paper.
I Placing results in the context of the existing literature;comparing results to other studies. drawing policyconclusions.
I Heteroskedasticity can be controlled for mechanically.
MSc Economic Policy Methods Seminar
Paper I
Thoughts on Paper 1
I Endogeniety? Why might this be an issue? Subsequentpapers have used instruments for prices (Burke andNishitateno, 2014).
I Dependent variable: fatalities vs crashes?
I Timing issues: do we expect taxes to have an immediateimpact on driver behaviour? Lagged effects?
I Is omitting two states the best?
I Subsequent papers have looked at international data; alsomore micro approaches, eg are age, gender, raceimportant?
I Graphs are useful.
MSc Economic Policy Methods Seminar
Paper II
Frain, John C. ”Inflation and money growth:
evidence from a multi-country dataset.” (2004)
MSc Economic Policy Methods Seminar
Paper II
Features on paper 2
I Well-motivated research question: challenges DeGrauwe’s view. Based on a simple economic model(MV=PY). A Structural approach.
I Up front on limitations: doesn’t check for casualty orshort-run economic impacts.
I Quality of data can impact on empirical work.
I Use of recursive estimates checks sensitivity of the βestimates to sample.
I Results placed in the context of the existing literature.
MSc Economic Policy Methods Seminar
Paper II
Comments on paper 2
I Causality is not tested: M ⇒ π or π ⇒ M?
I Short-run responses not estimated.
I Time series methods are available (in Stata) to exploreboth.
I Classic time series problems. Check R2
MSc Economic Policy Methods Seminar
Paper III
Mayor, Karen, et al. ”A Hedonic Analysis of the
Value of Rail Transport in the Greater Dublin
Area.” (2012)
MSc Economic Policy Methods Seminar
Paper III
Features on paper 3
I There are conceptual problems with the Hedonic pricingapproach; let’s focus on the econometrics.
I Array of variables to address omitted variable concerns.
I Power of dummy variables.
I Growing importance of GIS methods.
I Applying US dominated literature to Ireland.
I Recognises criticism of this literature.
MSc Economic Policy Methods Seminar
Paper III
Comments on paper 3
I Multicollinearity, eg what if larger properties are onlyavailable in cleaner non-polluted areas?
I Endoengienty. Think about the “price” of peace andquiet? Use of instruments.
I What if the housing market was not in equilibrium in thisperiod?
I The coefficient estimates are often not robust to changesin the model’s specification eg if we move from linear tonon-linear models.