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Title: Two Applications of the Random Coefficient Procedure: Correcting for Misspecifications in a Small Area Level Model and Resolving Simpson's Paradox
Authors: Swamy, P. A. V. B
Mehta, J. S.
Tavlas, G. S.
Hall, Stephen G.
First Published: 9-Dec-2014
Publisher: Elsevier
Citation: Economic Modelling 45 (2015) 93–98
Abstract: We apply a random-coefficient framework to deal with two problems frequently encountered in applied work. First, we use a real-world relationship to derive from it a sub-relationship among fewer variables without introducing a single specification error to correct misspecifications in a small area level model. Second, we use this framework to resolve Simpson’s paradox. We show that this paradox does not arise if a statistical relationship between a pair of variables is derived from the corresponding real-world relationship involving all relevant variables including the original pair without introducing a single specification error.
DOI Link: 10.1016/j.econmod.2014.10.053
ISSN: 0264-9993
Version: Post-print
Status: Peer-reviewed
Type: Journal Article
Rights: Archived with reference to SHERPA/RoMEO and publisher website. NOTICE: this is the author’s version of a work that was accepted for publication in Economic Modelling. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Economic Modelling, 45 (2015) DOI 10.1016/j.econmod.2014.10.053
Appears in Collections:Published Articles, Dept. of Economics

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