Economics-Based Econometrics

This course presents methods for constructing econometric specifications and systems directly based on economic models. One such approach formulates stochastic economic models that give rise to empirically implementable econometric models. The discussion will cover methods for estimating, diagnostic testing, and drawing inferences about the underlying economic primitives, including both parametric and non-parametric identification of economic structures. Applications include models from all fields of empirical microeconomics Industrial Organization, Labor, Public Finance, and Energy and Environmental Economics. Examples include: consumer demand models integrating corner solutions, intertemporal models of household and firm behavior, and dynamic models of single and multi-agent interactions with complete and incomplete information. These include auction markets, oligopolies, regulator-firm interactions, and nonlinear pricing.. The major theme of the course is to present a general framework for economic theory-based empirical research that allows researchers to recover the underlying economic primitives driving observed outcomes of an economic environment. Prerequisites: Econ 202, 203, 204, 270, 271, 272.