Omitted Variable Bias: Explaining the Bias

In the previous two posts on the Omitted Variable Bias (Post 1 and Post 2), we discussed the hypothetical case of finding out what determines the price of a car. In the hypothetical example, we assumed, for simplicity, that the price of a car depends only on the age of a car and its milage. In this post, we discuss the effects of the omitted variable bias on single coefficients. In order to do so, suppose that you want to find out what is the effect of miles on the price a car.

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Omitted Variable Bias: Understanding the Bias

The second part of the series on the Omitted Variable Bias intends to increase the readers understanding of the bias. Let’s continue with the example from the Introduction. Let the dependent variable be the price of a car and the explanatory variables be the car’s millage and the car’s age. In our case, both millage and age are important factors to that determine the price of a car. Continue reading

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Omitted Variable Bias: Introduction

The omitted variable bias is a common and serious problem in regression analysis. Generally, the problem arises if one does not consider all relevant variables in a regression. In this case, one violates the first assumption of the assumption of the classical linear regression model. In the introductory part of this series of posts on the omitted variable bias, you will learn what is exactly the omitted variable bias. Let’s start with an example, suppose Continue reading

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How to Read an Excel File dircetly form the Web in Julia Language?

In a former blog post (see here) I described how to read an Excel file into Julia. In this post I will focus on how to import an Excel file directly from the Web. This feature might be especially useful for recurring routines that rely on the most up-to-date data. Continue reading

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Create Venn-Diagram in R

A Venn diagram (also sometimes also called primary diagram or set diagram) is a diagram that depicts all possible logical relations between a collection of sets. Certain subjects, such as omitted variable bias, can be best be explained by using a Venn diagram. This post shows how to construct a Venn diagram in R.

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How to Read an Excel File in Julia Language? An example.

This article shortly describes how to read an Excel file into Julia. Generally, one can use different libraries to read Excel files, including XLSXReaderExcelReaders or Taro. In this tutorial I will focus on Taro as it created the fewest problems and provides – at least in my eyes – an easy to understand syntax.
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Tobin’s q-Investment Theory

In the 60s and 70s, economists including Nicholas Kaldor and James Tobin came up with an alternative investment theory: the q-investment theory, sometimes also referred to as Tobin’s q-investment theory. At its core, Tobin’s q theory of investment relates fluctuations in investment to changes in the stock market. Although the theory gained popularity only in the 70s, first elements of the theory can already be found in works of John Maynard Keynes. In his General theory of employment, interest and money, Keynes mentioned already that investment might be linked to the stock market.

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