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Two Applications of the Random Coefficient Procedure: Correcting for Misspecifications in a Small Area Level Model and Resolving Simpson's Paradox

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journal contribution
posted on 05.02.2015, 12:11 by P. A. V. B Swamy, J. S. Mehta, G. S. Tavlas, Stephen G. Hall
We apply a random-coefficient framework to deal with two problems frequently encountered in applied work. First, we use a real-world relationship to derive from it a sub-relationship among fewer variables without introducing a single specification error to correct misspecifications in a small area level model. Second, we use this framework to resolve Simpson’s paradox. We show that this paradox does not arise if a statistical relationship between a pair of variables is derived from the corresponding real-world relationship involving all relevant variables including the original pair without introducing a single specification error.

History

Citation

Economic Modelling 45 (2015) 93–98

Author affiliation

/Organisation/COLLEGE OF SOCIAL SCIENCE/Department of Economics

Version

AM (Accepted Manuscript)

Published in

Economic Modelling 45 (2015) 93–98

Publisher

Elsevier

issn

0264-9993

Copyright date

2015

Available date

09/12/2017

Publisher version

http://www.sciencedirect.com/science/article/pii/S0264999314004179

Language

en