Hi all,
Our final meeting of the academic year will be Wednesday April 29, where we
will hear Alexander MacKay present research on "*Estimating Models of
Supply and Demand: Instruments and Covariance Restrictions*”.
*Abstract*: We consider the identification of empirical models of supply
and demand. As is well known, a supply-side instrument can resolve price
endogeneity in demand estimation. We show that, under common assumptions,
two other approaches also yield consistent estimates of the joint model:
(i) a demand-side instrument, or (ii) a covariance restriction between
unobserved demand and cost shocks. The covariance restriction approach can
obtain identification even the absence of instruments. Further, supply and
demand assumptions alone may bound the structural parameters. We develop an
estimator for the covariance restriction approach that is constructed from
the output of ordinary least squares regression and performs well in small
samples. We illustrate the methodology with applications to ready-to-eat
cereal, cement, and airlines.
The paper can be found here
<https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3025845>.
*Zoom link*:
https://harvard.zoom.us/j/987462892
*When*: Wednesday, April 29 at 12noon - 1:30pm.
Best,
Georgie