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On The Interpretation of Instrumental Variables in the Presence of Specification Errors: A Causal Comment

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  • Burkhard Raunig

    (Economic Studies Division, Central Bank of Austria, Otto-Wagner-Platz 3, Vienna 1090, Austria
    The views expressed in this paper do not necessarily reflect those of the Central Bank of Austria or the Eurosystem.)

Abstract

Swamy et al. (2015) argue that valid instruments cannot exist when a structural model is misspecified. This note shows that this is not true in general. In simple examples valid instruments can exist and can help to estimate parameters of interest.

Suggested Citation

  • Burkhard Raunig, 2017. "On The Interpretation of Instrumental Variables in the Presence of Specification Errors: A Causal Comment," Econometrics, MDPI, vol. 5(3), pages 1-6, July.
    • Handle: RePEc:gam:jecnmx:v:5:y:2017:i:3:p:31-:d:105094
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    References listed on IDEAS

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    1. P.A.V.B. Swamy & George S. Tavlas & Stephen G. Hall, 2015. "On the Interpretation of Instrumental Variables in the Presence of Specification Errors," Econometrics, MDPI, vol. 3(1), pages 1-10, January.
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