This paper evaluates the performance of alternative estimators of the gravity equation when zero trade flows result from economically-based data-generating processes with heteroscedastic residuals and potentially-omitted variables.
... See More + In a standard Monte Carlo analysis, the paper finds that this combination can create seriously biased estimates in gravity models with frequencies of zero frequently observed in real-world data, and that Poisson Pseudo-Maximum-Likelihood models can be important in solving this problem. Standard threshold–Tobit estimators perform well in a Tobit-based data-generating process only if the analysis deals with the heteroscedasticity problem. When the data are generated by a Heckman sample selection model, the Zero-Inflated Poisson model appears to have the lowest bias. When the data are generated by a Helpman, Melitz, and Rubinstein-type model with heterogeneous firms, a Zero-Inflated Poisson estimator including firm numbers appears to provide the best results. Testing on real-world data for total trade throws up additional puzzles with truncated Poisson Pseudo-Maximum-Likelihood and Poisson Pseudo-Maximum-Likelihood estimators being very similar, and Zero-Inflated Poisson and truncated Poisson Pseudo-Maximum-Likelihood identical. Repeating the Monte Carlo analysis taking into account the high frequency of very small predicted trade flows in real-world data reconciles these findings and leads to specific recommendations for estimators.
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Policy Research Working Paper WPS7308 JUN 16, 2015
The objective of the additional financing for Higher Education Quality Improvement Project (HEQIP) for Yemen is to create the enabling conditions for the enhancement of the quality of university programs and graduate employability.
... See More + The project has four components. (1) Quality improvement for university programs component will be facilitating the establishment of a fully sustainable mechanism that will channel financial resources to higher education institutions in Yemen in order to support program development initiatives leading to significant qualitative improvement in teaching and learning, consonant with the social, economic, and employment priorities of the country. The proposed additional financing will fill the financing gap associated with the procurement of laboratory equipment and tools under this component. (2) Quality Assurance (QA) component supports activities that will institutionalize QA mechanisms and structures in higher education institutions and will foster enabling conditions conducive to the enhancement of the quality of university programs and graduate competencies. (3) Institutional capacity development component will support the planning and monitoring capacity of the Ministry of Higher Education and Scientific Research and nurture the capacity of Taiz University in terms of its fiduciary management and to enhance accountability. (4) Monitoring and evaluation and project management component will support the project coordination, implementation, management, and monitoring and evaluation.
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"The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence," by David Roodman and Jonathan Morduch (2014) (henceforth RM) is the most recent of a sequence of papers and web postings that seeks to refute the findings of the Pitt and Khandker (1998; henceforth PK) article "The Impact of Group-Based Credit on Poor Households in Bangladesh: Does the Gender of Participants Matter?"
... See More + that microcredit for women had significant, favorable effects on household consumption and other outcomes. In this version of RM, the authors have backed off many of their prior claims and methods after earlier replies noted their faults (see Pitt (1999), Pitt (2011a), Pitt (2011b), and Pitt and Khandker (2012)). Nonetheless, important claims against PK remain in this new version of RM and are addressed below. Readers should refer to Pitt and Khandker (2012) for a discussion of other issues with RM, including a discussion of the bimodal likelihood.
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Policy Research Working Paper WPS6801 MAR 01, 2014
This paper proposes an estimator for the endogenous switching regression models with fixed effects. The estimator allows for endogenous selection and for conditional heteroscedasticity in the outcome equation.
... See More + Applying the estimator to a dataset on the productivity in agriculture substantially changes the conclusions compared to earlier analysis of the same dataset. This paper proposes an estimator for the endogenous switching re-gression models with fixed effects. The estimator allows for endogenous selection and for conditional heteroscedasticity in the outcome equation. Applying the estimator to a dataset on the productivity in agriculture substantially changes the conclusions compared to earlier analysis of the same dataset.
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Policy Research Working Paper WPS6658 OCT 01, 2013
This paper introduces a computationally efficient method for estimating structural parameters of dynamic discrete choice models with large choice sets.
... See More + The method is based on Poisson pseudo maximum likelihood (PPML) regression, which is widely used in the international trade and migration literature to estimate the gravity equation. Unlike most of the existing methods in the literature, it does not require strong parametric assumptions on agents' expectations, thus it can accommodate macroeconomic and policy shocks. The regression requires count data as opposed to choice probabilities; therefore it can handle sparse decision transition matrices caused by small sample sizes. As an example application, the paper estimates sectoral worker mobility in the United States.
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Policy Research Working Paper WPS6480 JUN 01, 2013
"The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence," by David Roodman and Jonathan Morduch (2011) is the most recent of a sequence of papers and postings that seeks to refute the findings of the Pitt and Khandker (1998) article "The Impact of Group-Based Credit on Poor Households in Bangladesh: Does the Gender of Participants Matter?"
... See More + that microcredit for women had significant, favorable effects on poverty reduction. In this paper the authors show that these latest Roodman and Morduch claims are based on seriously flawed econometric methods and theory and a lack of due diligence in formulating models and interpreting output from packaged software. On the basis of Roodman and Morduch's preferred two-stage least squares regression, an alternative calculation of the standard errors would lead one to conclude that the problem with Pitt and Khandker is that they underestimate the positive and statistically significant effect of women's credit on household consumption. As in their previous efforts, the methods of Roodman and Morduch are shown to bias the findings in the direction of rejecting the results of Pitt and Khandker. We also further examine two aspects of our instrumental variable approach that have been attacked by Roodman and Morduch. The first is the validity of the exclusion restrictions underlying the use of interactions between program choice and the set of exogenous variables (including the village fixed effects) as instruments. The second is the application of the "one-half acre" program eligibility rule. The authors show that identification does not require both of these, and present new results dropping each assumption in turn. The results originally reported in the Pitt and Khandker paper hold up extremely well in this new analysis.
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Policy Research Working Paper WPS6273 NOV 01, 2012
This paper shows that the poisson quasi-maximum likelihood estimator applied to the gravity model produces estimates in which, summing across all partners, actual, and estimated total trade flows are identical.
... See More + Other methods such as ordinary least squares (OLS) do not have this desirable property. Indeed, poisson is the only quasi-maximum likelihood estimator that preserves total trade flows. This result is an additional reason for preferring poisson as a workhorse gravity model estimator. The paper is organized as follows: section one gives introduction. Section two presents a generalized gravity model. Section three outlines a simple demonstration of our proposition. Section four provides supporting empirical evidence, and section five concludes.
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Scientific progress offers tremendous potential benefits to society but also presents risks. While research focuses on how to manifest the benefits of any new technology, the outside community fears the consequences that technology may inadvertently have on social goods such as the environment, public health and security.
... See More + To balance the benefits of the progress of science against the risks associated with its application is one of the major public policy challenges of the 21st century. In this paper, the author argues that the precautionary principle is an extension of the scientific method in the popperian tradition and has precedent in hypothesis testing. Under this framework, we then explore an approach that captures the essence of the weaker precautionary principle but also accounts for the 'unacceptable' outcome through the use of a social standard or threshold of harm. Under this methodology, a social standard is established and accounted for in the cost-benefit analysis. The existence of the social standard creates an additional cost or benefit to the assessment of a project. The report illustrates the methodology with a discussion of two cases: the 'mad cow' disease and the regulation on carbon emission.
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This paper presents asymptotic theory and Monte-Carlo simulations comparing maximum-likelihood bivariate probit and linear instrumental variables estimators of treatment effects in models with a binary endogenous treatment and binary outcome.
... See More + The three main contributions of the paper are (a) clarifying the relationship between the Average Treatment Effect obtained in the bivariate probit model and the Local Average Treatment Effect estimated through linear IV; (b) comparing the mean-square error and the actual size and power of tests based on these estimators across a wide range of parameter values relative to the existing literature; and (c) assessing the performance of misspecification tests for bivariate probit models. The authors recommend two changes to common practices: bootstrapped confidence intervals for both estimators, and a score test to check goodness of fit for the bivariate probit model.
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Policy Research Working Paper WPS5601 MAR 01, 2011
Chiburis, Richard C.; Das, Jishnu; Lokshin, MichaelDisclosed
In recent years, due to the rapid development of mining industry and intensive minerals exploration, exploitation and processing activities in the country, close to 300 million square meters of earth have been damaged including 1721.9 hectares as result of minerals extractions, 14565.0 hectares because of roads and communications infrastructure, and 1206.4 hectares due to construction works respectively, disfiguring massively the pristine natural landscape, reducing the river water levels due to many dried up rivers and streams, and ultimately causing overwhelming damage to the nature and environment.
... See More + The development and enforcement of the 'methodology to carry out technical and biological rehabilitations in areas damaged by mining operations' is a first integrated methodology in our country to carry out the technical and biological rehabilitation of areas damaged during minerals exploitation and processing activities in conjunction with extraction technology and natural regions. Doing so will create opportunities to calculate realistically the technical and biological rehabilitation work cost and scope of areas damaged due to minerals exploitation and processing activities, carry out quality rehabilitation works in accordance with proper methodology and guideline, increase the size of pastureland and hay preparation areas, revive the vegetation cover, and reduce the desertification process. In addition, estimating the rehabilitation work scope, rehabilitation method and technology, required capital will have great importance to prevent the project implementer from possible loss and harm, and provide support to decision-makers of rehabilitation issues.
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Many highly-disaggregated cross-country indicators of institutional quality and the business environment have been developed in recent years. The promise of these indicators is that they can be used to identify specific reform priorities that policymakers and aid donors can target in their efforts to improve institutional and regulatory quality outcomes.
... See More + Doing so however requires evidence on the partial effects of these many very detailed variables on outcomes of interest, for example, investor perceptions of corruption or the quality of the regulatory environment. In this paper we use Bayesian Model Averaging (BMA) to systematically document the partial correlations between disaggregated indicators and several closely-related outcome variables of interest using two leading datasets: the Global Integrity Index and the Doing Business indicators. We find major instability across outcomes and across levels of disaggregation in the set of indicators identified by BMA as important determinants of outcomes. Disaggregated indicators that are important determinants of one outcome are on average not important determinants of other very similar outcomes. And for a given outcome variable, indicators that are important at one level of disaggregation are on average not important at other levels of disaggregation. These findings illustrate the difficulties in using highly-disaggregated indicators to identify reform priorities.
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Policy Research Working Paper WPS5254 MAR 01, 2010
