Tighter bounds in triangular systems |
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Authors: | Sung Jae Jun Joris Pinkse Haiqing Xu |
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Institution: | Center for Auctions, Procurements and Competition Policy, Department of Economics, The Pennsylvania State University, United States |
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Abstract: | We study a nonparametric triangular system with (potentially discrete) endogenous regressors and nonseparable errors. Like in other work in this area, the parameter of interest is the structural function evaluated at particular values. We impose a global exclusion and exogeneity condition, in contrast to Chesher (2005), but develop a rank condition which is weaker than Chesher’s. The alternative rank condition can be satisfied for binary endogenous regressors, and it often leads to an identified interval tighter than Chesher (2005)’s minimum length interval. We illustrate the potential of the new rank condition using the Angrist and Krueger (1991) data. |
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Keywords: | C14 C30 C31 |
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