On the Interpretation of Policy Effects from Estimates of Simultaneous Systems of Equations

5 Pages Posted: 10 Sep 2010

See all articles by George S. Ford

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies

John D. Jackson

Auburn University - Department of Economics

Date Written: 1998

Abstract

The purpose of this paper is threefold: first, we warn analysts against the use of structural coeffcient estimates alone for deducing quantitative inferences concerning many policy experiments. Second, we offer a potential solution to the problem by proposing a mutatis mutandis approach to deducing the 'full effect' of a policy change on the endogenous variables of the model. Finally, we show that this approach yields consistent estimates of the reduced form parameters, the true solution to the difficulty. An illustration is provided.

Keywords: Policy, Simultaneous Equations, Telecommunications, Competition

JEL Classification: C3, D4, L5

Suggested Citation

Ford, George S. and Jackson, John Douglas, On the Interpretation of Policy Effects from Estimates of Simultaneous Systems of Equations (1998). Applied Economics, Vol. 30, p. 995, 1998. Available at SSRN: https://ssrn.com/abstract=1674517

George S. Ford (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

John Douglas Jackson

Auburn University - Department of Economics ( email )

415 W. Magnolia
Auburn, AL 36849-5242
United States

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