Working Paper: NBER ID: w10154
Authors: Ariel Pakes
Abstract: This paper is a revised version of a keynote address delivered at the inaugural International Industrial Organization Conference in Boston, April 2003. I argue that new econometric tools have facilitated the estimation of models with realistic theoretical underpinnings, and because of this, have made empirical I.O. much more useful. The tools solve computational problems thereby allowing us to make the relationship between the economic model and the estimating equations transparent. This, in turn, enables us to utilize the available data more effectively. It also facilitates robustness analysis and clarifies the assumptions needed to analyze the causes of past events and/or make predictions of the likely impacts of future policy or environmental changes. The paper provides examples illustrating the value of simulation for the estimation of demand systems and of semiparametrics for the estimation of entry models.
Keywords: No keywords provided
JEL Codes: C1; L0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| new econometric tools (C51) | estimation of demand functions (C51) |
| new econometric tools (C51) | estimation of entry costs (L26) |
| estimation of demand functions (C51) | understanding of market outcomes (D43) |
| estimation of entry costs (L26) | understanding of market outcomes (D43) |
| new econometric tools (C51) | transparency of econometric models (C51) |
| transparency of econometric models (C51) | understanding of market outcomes (D43) |