Study week on the econometric approach to development planning

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Monograph

Identifikator:: 1824422792

URN:: urn:nbn:de:zbw-retromon-217476

Document type:: Monograph

Title:: Study week on the econometric approach to development planning

Place of publication:: Amsterdam [u.a.]

Publisher:: North-Holland Publ. Co. [u.a.]

Year of publication:: 1965

Scope:: XLVII, 1259 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

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Title:: Dynamic structure and estimation in economy-wide econometric models / FranklinM. Fisher, Massachuetts Institute of Technology - Cambridge, Mass. - U.S.A.

Collection:: Economics Books

138 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - J) ™ if not, omit it and proceed to the next lower-numbered instru- ment. Continue in this way. At every step, a given instrument is tested to see whether it contributes significantly to multiple correlation in the presence of all instruments which are a priori preferred to it and all other instruments which have already passed the test. When all instruments have been so tested, the ones remaining are the ones to be used. 6.4. Discussion of the Rules The point of this procedure (or the variants described be- low) is to replace the right-hand endogenous variables in the equation to be estimated by their regression-calculated values using instruments which satisfy the causal criterion as well as possible while keeping inconsistency at a tolerable level. Certain features require discussion. In the first place, multicollinearity at this stage of the pro- ceedings is automatically taken care of in a way consistent with the causal criterion. If some set of instruments is highly collinear, then that member of the set which is least preferred on a priori grounds will fail to reduce correlation significantly when it is tested as just described. It will then be omitted and the procedure guarantees that it will be the least preferred member of the set which is so treated. If the B-ordering is used, this will be the one most distantly structurally related to the endogenous variable which is to be replaced. Multicollinearity will be tolerated where it should be, namely, where despite its presence each instrument in the collinear set adds significant causal information. Second, it is evident that the procedure described has the property that no variable will be omitted simply because it is highly correlated with other variables already dropped. If two variables add significantly to correlation when both are present 61 Fisher - pag. 54

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