Module 2, Part 3: Estimating Demand for Cigarettes with IV
In part 3, we employ the IV estimator in the context of demand estimation for cigarettes. We also introduce the idea of a “fixed effect” in a regression specification.
Objectives
- Understand and use an IV estimator in R
- List and explain the key assumptions for a “good” instrument
- Define and explain a fixed effect in a regression context
Activities
- Continue work with the CDC Tax Burden on Tobacco data
- Estimate the price elasticity of demand for cigarettes using taxes as an instrument for price
Slides
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