Applied Econometrics

The course covers empirically and theoretically, the set of statistical tools applied in microeconometrics used in high-quality empirical research. The course reviews the last 30 years of developments in applied econometrics, using the potential outcome framework to estimate causal effects.

The course has two parts. The first covers methods that assume selection based on observable characteristics (OLS adjustment, Matching, and the Propensity Score). The second part details methods based on selection on unobservable characteristics: the randomized control trial (RCT), instrumental variables, regression discontinuity, synthetic control method, and difference in difference. For RCT, we cover issues of design, sampling, and power. For quasi-experiment (not RCTs) we explore issues related to standard errors, the characterization of compliers, and non-parametric estimation. Finally, we cover extensions to these main methods.

We focus on the applications that are relevant for policy decisions and general economic behavior. Most of the examples come from research in labor, public, political, and development economic. The course requires more than basic Stata or Matlab skills to do replication.

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