Comparing IV with Structural Models: What Simple IV Can and Cannot Identify
34 Pages Posted: 2 Feb 2009
This paper compares the economic questions addressed by instrumental variables estimators with those addressed by structural approaches. We discuss Marschak's Maxim: estimators should be selected on the basis of their ability to answer well-posed economic problems with minimal assumptions. A key identifying assumption that allows structural methods to be more informative than IV can be tested with data and does not have to be imposed.
Keywords: instrumental variables, structural approaches, Marschak's Maxim
JEL Classification: C31
Suggested Citation: Suggested Citation