Dynamic Causal Effects in a Nonlinear World: the Good, the Bad, and the Ugly

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Tác giả: Michal Kolesár, Mikkel Plagborg-Møller

Ngôn ngữ: eng

Ký hiệu phân loại: 003.75 Nonlinear systems

Thông tin xuất bản: 2024

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Bộ sưu tập: Metadata

ID: 204989

Applied macroeconomists frequently use impulse response estimators motivated by linear models. We study whether the estimands of such procedures have a causal interpretation when the true data generating process is in fact nonlinear. We show that vector autoregressions and linear local projections onto observed shocks or proxies identify weighted averages of causal effects regardless of the extent of nonlinearities. By contrast, identification approaches that exploit heteroskedasticity or non-Gaussianity of latent shocks are highly sensitive to departures from linearity. Our analysis is based on new results on the identification of marginal treatment effects through weighted regressions, which may also be of interest to researchers outside macroeconomics.Comment: 60 pages, including all appendices
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