IDEAS home Printed from https://ideas.repec.org/p/fip/fedfwp/96482.html
   My bibliography  Save this paper

Local Projections for Applied Economics

Author

Listed:
  • Òscar Jordà

Abstract

The dynamic causal effect of an intervention on an outcome is of paramount interest to applied macro- and micro-economics research. However, this question has been generally approached differently by the two literatures. In making the transition from traditional time series methods to applied microeconometrics, local projections can serve as a natural bridge. Local projections can translate the familiar language of vector autoregressions (VARs) and impulse responses into the language of potential outcomes and treatment effects. There are gains to be made by both literatures from greater integration of well established methods in each. This review shows how to make these connections and points to potential areas of further research.

Suggested Citation

  • Òscar Jordà, 2023. "Local Projections for Applied Economics," Working Paper Series 2023-16, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:96482
    DOI: 10.24148/wp2023-16
    as

    Download full text from publisher

    File URL: https://www.frbsf.org/wp-content/uploads/sites/4/wp2023-16.pdf
    File Function: Full text - article PDF
    Download Restriction: no
    File URL: https://libkey.io/10.24148/wp2023-16?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    2. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    3. Silvana Tenreyro & Gregory Thwaites, 2016. "Pushing on a String: US Monetary Policy Is Less Powerful in Recessions," American Economic Journal: Macroeconomics, American Economic Association, vol. 8(4), pages 43-74, October.
    4. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
    5. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    6. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    7. Barnichon, Regis & Matthes, Christian, 2018. "Functional Approximation of Impulse Responses," Journal of Monetary Economics, Elsevier, vol. 99(C), pages 41-55.
    8. Hansen, Lars Peter & Heaton, John & Yaron, Amir, 1996. "Finite-Sample Properties of Some Alternative GMM Estimators," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(3), pages 262-280, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ash, Thomas & Nikolaishvili, Giorgi, 2024. "A Replication of "The Macroeconomic Impact of Europe's Carbon Taxes" by Metcalf and Stock (2023)," I4R Discussion Paper Series 167, The Institute for Replication (I4R).
    2. Juan R. Hernández & Mateo Hoyos & Daniel Ventosa-Santaulària, 2024. "Monetary Policy in Emerging Markets under Global Uncertainty," Working Papers DTE 634, CIDE, División de Economía.
    3. Allayioti, Anastasia & Gόrnicka, Lucyna & Holton, Sarah & Martínez Hernández, Catalina, 2024. "Monetary policy pass-through to consumer prices: evidence from granular price data," Working Paper Series 3003, European Central Bank.
    4. Matzner, Anna & Steininger, Lea, 2024. "Firms’ heterogeneous (and unintended) investment response to carbon price increases," Working Paper Series 2958, European Central Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Òscar Jordà & Alan M. Taylor, 2024. "Local Projections," NBER Working Papers 32822, National Bureau of Economic Research, Inc.
    2. Atsushi Inoue & `Oscar Jord`a & Guido M. Kuersteiner, 2023. "Inference for Local Projections," Papers 2306.03073, arXiv.org, revised Aug 2024.
    3. Isabella Giorgetti & Matteo Picchio, 2021. "One billion euro programme for early childcare services in Italy," Metroeconomica, Wiley Blackwell, vol. 72(3), pages 460-492, July.
    4. Carpenter, Christopher S. & Churchill, Brandyn F. & Marcus, Michelle, 2023. "Bad lighting: Effects of youth indoor tanning prohibitions," Journal of Health Economics, Elsevier, vol. 88(C).
    5. Bietenbeck, Jan & Leibing, Andreas & Marcus, Jan & Weinhardt, Felix, 2023. "Tuition fees and educational attainment," European Economic Review, Elsevier, vol. 154(C).
    6. Azémar, Céline & Desbordes, Rodolphe & Wooton, Ian, 2020. "Is international tax competition only about taxes? A market-based perspective," Journal of Comparative Economics, Elsevier, vol. 48(4), pages 891-912.
    7. Meinhofer, Angélica & Witman, Allison E. & Hinde, Jesse M. & Simon, Kosali, 2021. "Marijuana liberalization policies and perinatal health," Journal of Health Economics, Elsevier, vol. 80(C).
    8. Christian Kümpel, 2019. "Do financial incentives influence the hospitalization rate of nursing home residents? Evidence from Germany," Health Economics, John Wiley & Sons, Ltd., vol. 28(11), pages 1235-1247, November.
    9. Jungbin Hwang, 2017. "Simple and Trustworthy Cluster-Robust GMM Inference," Working papers 2017-19, University of Connecticut, Department of Economics, revised Aug 2020.
    10. Bruno Ferman, 2023. "Inference in difference‐in‐differences: How much should we trust in independent clusters?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(3), pages 358-369, April.
    11. van den End, Jan Willem & Konietschke, Paul & Samarina, Anna & Stanga, Irina M., 2021. "Macroeconomic reversal rate in a low interest rate environment," Working Paper Series 2620, European Central Bank.
    12. Cristina Ballester & Dolores Furió, 2017. "Impact of Wind Electricity Forecasts on Bidding Strategies," Sustainability, MDPI, vol. 9(8), pages 1-17, August.
    13. Goussé, Marion & Leturcq, Marion, 2022. "More or less unmarried. The impact of legal settings of cohabitation on labour market outcomes," European Economic Review, Elsevier, vol. 149(C).
    14. Joseph, Iverson-Love, 2022. "The effect of natural disaster on economic growth: Evidence from a major earthquake in Haiti," World Development, Elsevier, vol. 159(C).
    15. Domínguez, Magdalena & Montolio, Daniel, 2021. "Bolstering community ties as a mean of reducing crime," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 916-945.
    16. Kamila Cygan-Rehm, 2022. "Lifetime Consequences of Lost Instructional Time in the Classroom: Evidence from Shortened School Years," CESifo Working Paper Series 9892, CESifo.
    17. Nicolás González-Pampillón & Jordi Jofre-Monseny & Elisabet Viladecans-Marsal, 2020. "Can urban renewal policies reverse neighborhood ethnic dynamics? [Urban renewal after the Berlin Wall: a place-based policy evaluation]," Journal of Economic Geography, Oxford University Press, vol. 20(2), pages 419-457.
    18. Hwang, Jungbin, 2021. "Simple and trustworthy cluster-robust GMM inference," Journal of Econometrics, Elsevier, vol. 222(2), pages 993-1023.
    19. Cipullo, Davide & Reslow, André, 2022. "Electoral cycles in macroeconomic forecasts," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 307-340.
    20. Nick Stenner, 2022. "The Asymmetric Effects of Monetary Policy: Evidence from the United Kingdom," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(3), pages 516-543, June.

    More about this item

    Keywords

    local projections; vector autoregressions; panel data; potential outcomes;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedfwp:96482. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Federal Reserve Bank of San Francisco Research Library (email available below). General contact details of provider: https://edirc.repec.org/data/frbsfus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.