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# Re: st: Reverse Causation Solutions?

 From Vũ Võ To statalist@hsphsun2.harvard.edu Subject Re: st: Reverse Causation Solutions? Date Thu, 20 Jun 2013 18:23:12 +0200

```This is not a Stata question. Is it raised in a wrong forum?

Rgds,

Vu

On 20 June 2013 18:18, Mai Anh Ngo <maianh.ngo@gmail.com> wrote:
> I have a problem of reverse causation in my regression model for a
> panel data set with unobserved heterogeneity. My regression equation
> is as follows:
>
> Y1it = a + b*Y2it + c*Xit + ui + eit
>
> where Y1it and Y2it are binary and it is suspected that there is
> possibly reverse causation from Y2it to Y1it or from Y2i,t-1 to Y1it
>
> I could not find a good instrument to use the instrumental variable
> method and I am thinking of estimating a bivariate model:
>
> Y1it = a + b*Y2it + c*Xit + ui + eit
>
> Y2it= d +e*Y1it  +  f*Zit + vi +  rit
>
> where the error term eit and rit are allowed to be correlated.
> However, I was told that in general, a bivariate model would not solve
> reverse causation/simultaneity problem. Is that true?
>
> What are the methods that can be used to solve reverse causation or
> simultaneity problem?  Thank you for your consideration.
>
> Mai Ngo
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--

Vo Duc Hoang Vu
Faculty of Development Economics
University of Economics HCMC
1 A Hoang Dieu Street
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Vietnam
Tel: +84 94 550 22 77 (VN); +31 624 63 29 45 (NL)
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E-mail:hoangvu@ueh.edu.vn
http://www.voduchoangvu.net
*
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```