Structural models for policy-making: Coping with parametric uncertainty

• Tác giả: Philipp Eisenhauer, Janoś Gabler, Lena Janys, Christopher Walsh
• Ngôn ngữ: eng
• Ký hiệu phân loại: 320.6 Policy making
• Thông tin xuất bản: 2021
• Bộ sưu tập: Metadata
• ID: 166418

Tóm tắt

The ex-ante evaluation of policies using structural econometric models is based on estimated parameters as a stand-in for the true parameters. This practice ignores uncertainty in the counterfactual policy predictions of the model. We develop a generic approach that deals with parametric uncertainty using uncertainty sets and frames model-informed policy-making as a decision problem under uncertainty. The seminal human capital investment model by Keane and Wolpin (1997) provides a well-known, influential, and empirically-grounded test case. We document considerable uncertainty in the models's policy predictions and highlight the resulting policy recommendations obtained from using different formal rules of decision-making under uncertainty.