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Efficient two-sample instrumental variable estimators with change points and near-weak identification

Bertille Antoine, Otilia Boldea, Niccolo Zaccaria

arXiv 24 Jun 2024 · Econometrics · 2 citations (OpenAlex)

arXiv:2406.17056 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We consider estimation and inference in a linear model with endogenous regressors where the parameters of interest change across two samples. If the first-stage is common, we show how to use this information to obtain more efficient two-sample GMM estimators than the standard split-sample GMM, even in the presence of near-weak instruments. We also propose two tests to detect change points in the parameters of interest, depending on whether the first-stage is common or not. We derive the limiting distribution of these tests and show that they have non-trivial power even under weaker and possibly time-varying identification patterns. The finite sample properties of our proposed estimators and testing procedures are illustrated in a series of Monte-Carlo experiments, and in an application to the open-economy New Keynesian Phillips curve. Our empirical analysis using US data provides strong support for a New Keynesian Phillips curve with incomplete pass-through and reveals important time variation in the relationship between inflation and exchange rate pass-through.

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Ramey, V. A. and S. Zubairy (2018) Government spending multipliers in good times and in bad: Evidence from U.S. historical data1.00073100%
2Angrist, J. D. and A. B. Krueger (1992) The effect of age at school entry on educational attainment: an application of instrumental variables with moments from two samp…1.00053100%
3Inoue, A. and G. Solon (2010) Two-sample instrumental variables estimators1.00053100%
4Hall, A. R., S. Han, and O. Boldea (2012) Inference regarding multiple structural changes in linear models with endogenous regressors0.94118783%
5Abbas, S. K (2023) The New Keynesian Phillips Curve and Imperfect Exchange Rate Pass-Through0.92843100%
6Antoine, B. and O. Boldea (2018) Efficient estimation with time-varying information and the New Keynesian Phillips Curve self0.87452100%
7Bai, J. and P. Perron (2003) Computation and analysis of multiple structural change models0.7375340%
8Alpanda, S., E. Granziera, and S. Zubairy (2021) State dependence of monetary policy across business, credit and interest rate cycles0.64422100%
9Magnusson, L. and S. Mavroeidis (2014) Identification using stability restrictions0.64422100%
10Inoue, A., B. Rossi, and Y. Wang (2024) Has the Phillips curve flattened?0.64422100%

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arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

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