Changes
Jump to navigation
Jump to search
→What is the author's topic and hypothesis?
Since <math>\frac{\partial P}{\partial C_{p}} < 0</math> we know that an estimate of <math>\frac{\partial I}{\partial C_{p}}</math> is informative about the sign of <math>\frac{\partial I}{\partial P}</math>
So, we can think of <math>\frac{\partial I}{\partial C_{p}}</math> as the "reduced form" where marginal cost of protection is an instrumental variable. Since we do not have data on protection levels, we can not estimate the "first stage" and recover <math>\frac{\partial I}{\partial P}</math>.
=== How does the author test the hypothesis? ===
