Estimating Demand with Recentered Instruments (joint with Kirill Borusyak and Mauricio Caceres Bravo)
Peter Hull, Brown University
We develop a new approach to estimating flexible demand models with exogenous supply-side shocks. Our approach avoids conventional assumptions of exogenous product characteristics, putting no restrictions on product entry, despite using instrumental variables that incorporate characteristic variation. The proposed instruments are model-predicted responses of endogenous variables to the exogenous shocks, recentered to avoid bias from endogenous characteristics. We illustrate the approach in a series of Monte Carlo simulations and an application to the demand for Medicare Advantage insurance plans.
| Building: | North Quad |
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| Website: | |
| Event Type: | Workshop / Seminar |
| Tags: | Economics, Public Finance, seminar |
| Source: | Happening @ Michigan from Department of Economics, Public Finance, Department of Economics Seminars |
