Identification of Average Marginal Effects in Fixed Effects Dynamic Discrete Choice Models

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Tác giả: Victor Aguirregabiria, Jesus M Carro

Ngôn ngữ: eng

Ký hiệu phân loại: 338.5 General production economics

Thông tin xuất bản: 2021

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Bộ sưu tập: Metadata

ID: 167411

Comment: 59 pages, 6 figuresIn nonlinear panel data models, fixed effects methods are often criticized because they cannot identify average marginal effects (AMEs) in short panels. The common argument is that identifying AMEs requires knowledge of the distribution of unobserved heterogeneity, but this distribution is not identified in a fixed effects model with a short panel. In this paper, we derive identification results that contradict this argument. In a panel data dynamic logit model, and for $T$ as small as three, we prove the point identification of different AMEs, including causal effects of changes in the lagged dependent variable or the last choice's duration. Our proofs are constructive and provide simple closed-form expressions for the AMEs in terms of probabilities of choice histories. We illustrate our results using Monte Carlo experiments and with an empirical application of a dynamic structural model of consumer brand choice with state dependence.
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