Exogenous Treatment and Endogenous Factors: Vanishing of Omitted Variable Bias on the Interaction Term

By O. Nizalova, Irina Murtazashvili. Social Science Research Network, 2012

210 citations recorded by the source corpus.

Abstract Whether interested in the differential impact of a particular factor in various institutional settings or in the heterogeneous effect of policy or random experiment, the empirical researcher confronts a problem if the factor of interest is correlated with an omitted variable. This paper presents the circumstances under which it is possible to arrive at a consistent estimate of the mentioned effect. We find that if the source of heterogeneity and omitted variable are jointly independent of policy or treatment, then the OLS estimate on the interaction term between the treatment and endogenous factor turns out to be consistent.

Subfields: Statistics and Probability

View Paper: https://www.semanticscholar.org/paper/59009ee93607fc8640acece0e0980dd8794f2c98

Citations in the corpus

• Aid and growth: New evidence using an excludable instrument (2020, unknown): “Given that the effect of the potentially endogenous variable is controlled for, the interaction of the endogenous variable with an exogenous one can be interpreted as being exogenous (Nunn and Qian 2014, Bun and Harrison 2014, Nizalova and Murtazashvili 2016).”