The second edition of this acclaimed graduate text provides a unified treatment of two methods used in contemporary econometric research, cross section and data panel methods. By focusing on assumptions that can be given behavioral content, the book maintains an appropriate level of rigor while emphasizing intuitive thinking. The analysis covers both linear and nonlinear models, including models with dynamics and/or individual heterogeneity. In addition to general estimation frameworks (particular methods of moments and maximum likelihood), specific linear and nonlinear methods are covered in detail, including probit and logit models and their multivariate, Tobit models, models for count data, censored and missing data schemes, causal (or treatment) effects, and duration analysis. Econometric Analysis of Cross Section and Panel Data was the first graduate econometrics text to focus on microeconomic data structures, allowing assumptions to be separated into population and sampling assumptions. This second edition has been substantially updated and revised. Improvements include a broader class of models for missing data problems; more detailed treatment of cluster problems, an important topic for empirical researchers; expanded discussion of "generalized instrumental variables" (GIV) estimation; new coverage (based on the author's own recent research) of inverse probability weighting; a more complete framework for estimating treatment effects with panel data, and a firmly established link between econometric approaches to nonlinear panel data and the "generalized estimating equation" literature popular in statistics and other fields. New attention is given to explaining when particular econometric methods can be applied; the goal is not only to tell readers what does work, but why certain "obvious" procedures do not. The numerous included exercises, both theoretical and computer-based, allow the reader to extend methods covered in the text and discover new insights.

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Econometric Analysis of Cross Section and Panel Data

Preface to the Princeton Landmarks in Biology Edition vii Preface xi Symbols Used xiii 1. The Importance of Islands 3 2. Area and Number of Speicies 8 3. Further Explanations of the Area-Diversity Pattern 19 4. The Strategy of Colonization 68 5. Invasibility and the Variable Niche 94 6. Stepping Stones and Biotic Exchange 123 7. Evolutionary Changes Following Colonization 145 8. Prospect 181 Glossary 185 References 193 Index 201

The Theory of Island Biogeography

Hyperbolic discount functions induce dynamically inconsistent preferences, implying a motive for consumers to constrain their own future choices. This paper analyzes the decisions of a hyperbolic consumer who has access to an imperfect commitment technology: an illiquid asset whose sale must be initiated one period before the sale proceeds are received. The model predicts that consumption tracks income, and the model explains why consumers have asset-specific marginal propensities to consume. The model suggests that financial innovation may have caused the ongoing decline in U. S. savings rates, since financial innovation in- creases liquidity, eliminating commitment opportunities. Finally, the model implies that financial market innovation may reduce welfare by providing âtoo muchâ liquidity.

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Golden Eggs and Hyperbolic Discounting

This paper discusses the discounted utility (DU) model: its historical development, underlying assumptions, and "anomalies" - the empirical regularities that are inconsistent with its theoretical predictions. We then summarize the alternate theoretical formulations that have been advanced to address these anomalies. We also review three decades of empirical research on intertemporal choice, and discuss reasons for the spectacular variation in implicit discount rates across studies. Throughout the paper, we stress the importance of distinguishing time preference, per se, from many other considerations that also influence intertemporal choices.

/pdf/time-discounting-and-time-preference-a-critical-review-47don96ek5.pdf

Time Discounting and Time Preference: A Critical Review

Weak instruments can produce biased IV estimators and hypothesis tests with large size distortions. But what, precisely , are weak instruments, and how does one detect them in practice? This paper proposes quantitative definitions of weak instruments based on the maximum IV estimator bias, or the maximum Wald test size distortion, when there are multiple endogenous regressors. We tabulate critical values that enable using the first-stage F-statistic (or, when there are multiple endogenous regressors, the Cragg-Donald (1993) statistic) to test whether give n instruments are weak.

/pdf/testing-for-weak-instruments-in-linear-iv-regression-5jtmsbf5ai.pdf

Testing for Weak Instruments in Linear IV Regression

The correlation between instruments and explanatory variables is a key determinant of the performance of the instrumental variables estimator. The R2 from regressing the explanatory variable on the instrument vector is a useful measure of relevance in univariate models, but can be misleading when there are multiple endogenous variables. This note proposes a computationally simple partial R2 measure of instrument relevance for multivariate models.

/pdf/instrument-relevance-in-multivariate-linear-models-a-simple-2ytcue47bx.pdf

Instrument Relevance in Multivariate Linear Models: A Simple Measure

The origins of lithic projectile point technology: evidence from Africa, the Levant, and Europe

This paper isolates households in the PSID whose heads can be matched to particular long-term union contracts with high confidence. The author uses use published information on these contracts to construct a household-specific measure of expected wage growth. He finds that predictable wage movements are significantly correlated with consumption changes, contrary to neoclassical consumption theory. The author finds that consumption responds more strongly to predictable income declines than to predictable income increases. This asymmetry is inconsistent with liquidity constraints and myopia but is qualitatively consistent with models in which preferences exhibit loss aversion. Copyright 1995 by American Economic Association.

Union contracts and the life-cycle/permanent-income hypothesis

This paper asks whether parental income per se has a positive impact on children's human capital accumulation. Previous research has established that income is positively correlated across generations. This does not prove that parents' money matters, however, since income is presumably correlated with unobserved abilities transmitted across generations. This paper estimates the impact of parental income by focusing on variation due to parental factors -- union, industry, and job loss experience -- that arguably represent luck. When I examine a nationally representative sample, I find that changes in parental income due to luck have at best a negligible impact on children's human capital. On the other hand, I find that parental income does matter in a sample of low income families. These findings are potentially consistent with models in which credit market imperfections constrain low income households to make suboptimal investments in their children.

Does Parents' Money Matter?

https://www.nber.org/system/files/working_papers/w6026/w6026.pdf

John J. Shea

Papers

Instrument Relevance in Multivariate Linear Models: A Simple Measure

The origins of lithic projectile point technology: evidence from Africa, the Levant, and Europe

Union contracts and the life-cycle/permanent-income hypothesis

Does Parents' Money Matter?

Does parents' money matter?