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 Omitted Variable Bias: Understanding the Bias
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 Omitted Variable Bias: Introduction
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 How to Read an Excel File dircetly form the Web in Julia Language?
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.
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 XLSXReader , ExcelReaders 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.
Continue reading How to Read an Excel File in Julia Language? An example.
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.
The Neoclassical Theory of Investment
Dale W. Jorgenson contributed to the development and understanding on the neoclassical investment theory. In the following post I will try to outline and discuss the neoclassical investment theory in simply words. At its heart, Jorgenson’s investment model bases on the idea that there exists an optimal capital stock. Economic actors, such as firms, invest and disinvest in order to reach the optimal capital stock. Continue reading The Neoclassical Theory of Investment
WordAds: Minimum Traffic Requirements
When having a blog hosted at wordpress.com, there come a time when all bloggers will ask themselves the same question: What is the minimum traffic requirement for WordAds?
Consulting the FAQ on the WordAds page (https://wordads.co/faq) does not tell you much: A site generally needs thousands of pageviews each month to earn meaningful revenue, it says. Certainly, this answer does not help. Fortunately, the web is full posts and comments of people speculating about the minimum traffic requirement. Needless to say that none of them truly knows the exact number. We can nonetheless learn from past observations and try to approximate the current number with some estimates. It appears that the minimum traffic requirement of WordAds is not constant over time. When Automattic launched WordAds on November 29, 2011, some blogs were accepted with less than 5000 pageviews per month. However, the number of views required to be accepted to the advertisement program quickly rose after the initial launch. In the following years some bloggers reported that they got accepted when reaching 15000 views per month, others speculated that the number was further rising. Lately, reports on blogs being accepted to WordAds have been rare.
Continue reading WordAds: Minimum Traffic RequirementsGeneral Principles for Specifying a Dynamic General Equilibrium Model
The Dynamic General Equilibrium Model (DGE) is characterized by various features. Firstly, a DGE is dynamic, which means that it considers an economy over time. Second, it considers a general economy, which implies that the modelled economy is fully specified. Lastly, the model relies on an equilibrium concept. Continue reading General Principles for Specifying a Dynamic General Equilibrium Model
Economic Theory Blog 