This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 103 No. 3 (May 2013)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

Control Functions and Simultaneous Equations Methods

Article Citation

Blundell, Richard, Dennis Kristensen, and Rosa L. Matzkin. 2013. "Control Functions and Simultaneous Equations Methods." American Economic Review, 103(3): 563-69.

DOI: 10.1257/aer.103.3.563

Abstract

The control function approach is a convenient method of estimation in simultaneous equation systems. This requires that the system can be expressed in triangular form with variables satisfying a conditional mean independence restriction. Linear simultaneous models with additive errors can always be expressed in this form. However, in nonlinear nonadditive simultaneous systems, conditional independence requires a strong additional restriction known as control function separability. We argue that nonadditive models are a key characteristic of simultaneous models of economic behavior with unobserved heterogeneity. We review alternative "system" approaches and document the biases that occur when the control function approach is used inappropriately.

Article Full-Text Access

Full-text Article

Additional Materials

Authors

Blundell, Richard (U College London and IFS, London)
Kristensen, Dennis (U College London and IFS, London)
Matzkin, Rosa L. (UCLA)

JEL Classifications

C26: Single Equation Models: Single Variables: Instrumental Variables (IV) Estimation
C36: Multiple or Simultaneous Equation Models: Instrumental Variables (IV) Estimation


American Economic Review


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us