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An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Units
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The authors illustrates the danger of spurious regression from this kind of misspecification, using as an example a wage regression estimated on data for individual workers that includes in the specification aggregate regressors for characteristics of geographical states.Abstract:
Many economic researchers have attempted to measure the effect of aggregate market or public policy variables on micro units by merging aggregate data with micro observations by industry, occupation, or geographical location, then using multiple regression or similar statistical models to measure the effect of the aggregate variable on the micro units. The methods are usually based upon the assumption of independent disturbances, which is typically not appropriate for data from populations with grouped structure. Incorrectly using ordinary least squares can lead to standard errors that are seriously biased downward. This note illustrates the danger of spurious regression from this kind of misspecification, using as an example a wage regression estimated on data for individual workers that includes in the specification aggregate regressors for characteristics of geographical states. Copyright 1990 by MIT Press.read more
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Endogenous transport prices and trade imbalances
Olaf Jonkeren,Olaf Jonkeren,Erhan Demirel,Jos van Ommeren,Jos van Ommeren,Piet Rietveld,Piet Rietveld +6 more
Abstract: According to economic theory, imbalances in trade flows affect transport prices, because (some) carriers have to return without cargo from the low-demand region to the high-demand region. Therefore, transport prices in the high-demand direction have to exceed those in the low-demand direction. This implies that transport costs, and therefore trade costs, are fundamentally endogenous with respect to trade imbalances. We study the effect of an imbalance in trade flows on transport prices using micro-data on trips made by carriers in the inland waterway network in North West Europe. We find that imbalances in trade flows have substantial effects on transport prices. We estimate that a one standard deviation increase in the region’s trade imbalance (the ratio of export and import cargo flows) increases the transport price per tonne of trips departing from this region by about 7%.
Journal ArticleDOI
Quality of Life and Compact Development Policies in Bandung, Indonesia
TL;DR: In this paper, the authors explored whether quality of life (QOL) corresponds to the spatial pattern of urban system as a result of compact development policy practice in Bandung city, Indonesia.
Journal ArticleDOI
Economic uncertainty and bank risk: Evidence from emerging economies
TL;DR: In this article, the authors examined the impact of economic uncertainty on the risk of banks, and found consistent and robust evidence that bank risk increases as the level of uncertainty increases, and investigated possible mechanisms whereby economic uncertainty is translated into bank risk, and present evidence that the uncertaintybank risk nexus is more attributable to the option value of waiting, search-for-yield strategies and bank herding behaviors than various demand-side effects.
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Recessions, wealth destruction, and the timing of retirement
TL;DR: In this paper, the authors use aggregate and micro-census data on old-age labor supply as well as time series date on unemployment, stock and bond returns, and house appreciation to estimate business cycle effects on Social Security benefit acceptance and labor force exit.
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Job satisfaction and relative income in economic transition: Status or signal?. The case of urban China.
Wenshu Gao,Russell Smyth +1 more
TL;DR: The authors examined whether an increase in reference group income lowers or increases job satisfaction in urban China and found that the status effect operates through satisfaction with co-workers, operating procedures, pay and supervision.
References
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Book
Statistical abstract of the United States
TL;DR: The Red River of the North basin of the Philippines was considered a part of the Louisiana Purchase by the United States Department of Commerce in the 1939 Census Atlas of the United Philippines as discussed by the authors.
Journal ArticleDOI
Elements of Econometrics.
Ian Domowitz,Jan Kmenta +1 more
TL;DR: The Elements of Econometrics as mentioned in this paper is a textbook for upper-level undergraduate and master's degree courses and may usefully serve as a supplement for traditional Ph.D. courses in economics.
Book
Elements of econometrics
TL;DR: The emphasis is on simplification whenever possible, assuming the readers know college algebra and basic calculus, and Jan Kmenta explains all methods within the simplest framework, and generalizations are presented as logical extensions of simple cases.
Journal ArticleDOI
Maximum Likelihood Approaches to Variance Component Estimation and to Related Problems
TL;DR: In this paper, the authors proposed a restricted maximum likelihood (reml) approach which takes into account the loss in degrees of freedom resulting from estimating fixed effects, and developed a satisfactory asymptotic theory for estimators of variance components.
Journal ArticleDOI
Random group effects and the precision of regression estimates
TL;DR: The authors analyzes several empirical examples to investigate the applicability of random effects models and the consequences of inappropriately using ordinary least squares (OLS) estimation in the presence of random group effects.