The Review of Economics and Statistics Vol. 68 No. 4 1986
Endogeneity Testing in a Supply and Demand Framework
Abstract
The powers of Wu-Hausman endogeneity tests are related to the normalization d ecision in estimating demand equations. Power is not invariant to the choice bet ween quantity and price as the dependent variable. A theoretical result due to N akamura and Nakamura_(1984) is used to explore the dependence of power on parame ters of the supply and demand system. The theoretical result is corroborated wit h a Monte Carlo experiment. The power results are used to analyze the U.S. deman d for poultry meat wherein price, but not quantity, is found to be predetermined
- DOI
- 10.2307/1924523
- Volume
- 68
- Issue
- 4
- Pages
- 638
- Sources
- openalex crossref