Applied Microeconometrics I

Catalog description

In this course, we will study microeconometrics, a subfield that encompasses specification as well as a variety of estimation, computational, and simulation methods that allow us to pursue specification and parameterization of econometric models suitable for analyzing micro-level data. We will see that these methods support an enriched basis for examining the validity of microeconomic theory, and also extend the analytics feasibly tackled by microeconomics. At the micro-level of empirical analysis, we will see our theory predicts high frequencies of corner solutions, abrupt switching, and discontinuities. In each case, these predictions are also apparent in micro data. Together, these conditions call for methods that go beyond simple continuous choice functions and equilibria often found adequate for aggregate static and dynamic modeling. Knowledge of these new methods is essential to empirical learning in most areas of contemporary applied microeconomics. These methods evolved to support the active application of microeconomic theories of micro-level behavior (e.g. discrete choice, corner solutions, cusps in dynamic paths) as well as to address peculiar features of micro-level data such as error-in-measurement, availability of only binary or polychotomous indicators of continuous variables, and substantial heterogeneity. Theory is relied upon to specify models prior to estimation, to specify characteristics of data sets, and to interpret results.