Lesson plan
Structural estimation
In econometrics, structural estimation is a technique for estimating deep "structural" parameters of theoretical economic models. The term is inherited from the simultaneous equations model, also used in other fields. Structural estimation is extensively using the equations from the economics theory, and in this sense is contrasted with "reduced form estimation" and other nonstructural estimations that study the statistical relationships between the observed variables while utilizing the economics theory very lightly (mostly to distinguish between the exogenous and endogenous variables, so called "descriptive models"). The idea of combining statistical and economic models dates to mid-20th century and work of the Cowles Commission. The difference between a structural parameter and a reduced-form parameter was formalized in the work of the Cowles Foundation. A structural parameter is also said to be "policy invariant" whereas the value of reduced-form parameter can depend on exogenously determined parameters set by public policy makers. The distinction between structural and reduced-form estimation within "microeconometrics" is related to the Lucas critique of reduced-form macroeconomic policy predictions.
Article summary
In econometrics, structural estimation is a technique for estimating deep "structural" parameters of theoretical economic models. The term is inherited from the simultaneous equations model, also used in other fields. Structural estimation is extensively using the equations from the economics theory, and in this sense is contrasted with "reduced form estimation" and other nonstructural estimations that study the statistical relationships between the observed variables while utilizing the economics theory very lightly (mostly to distinguish between the exogenous and endogenous variables, so called "descriptive models"). The idea of combining statistical and economic models dates to mid-20th century and work of the Cowles Commission. The difference between a structural parameter and a reduced-form parameter was formalized in the work of the Cowles Foundation. A structural parameter is also said to be "policy invariant" whereas the value of reduced-form parameter can depend on exogenously determined parameters set by public policy makers. The distinction between structural and reduced-form estimation within "microeconometrics" is related to the Lucas critique of reduced-form macroeconomic policy predictions.
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Discussion questions
- Summarise the article in your own words. Which single claim would you verify first, and why?
- Which claim in this article is most likely to be revised as the sources update? How would you check its current status?
- If two sources disagreed about one of these facts, what would you need in order to trust one over the other?
Bibliography
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Key claims and bibliography are generated from the same tracked claims and sources as the article page.