When X_t is strictly exogenous, the following estimator(s)of dynamic causal effects are available: A)estimating an ADL model and calculating the dynamic multipliers from the estimated ADL coefficients B)using GLS to estimate the coefficients of the distributed lag model C)neither (a)or (b) D)(a)and (b)

Question

Quizplus · Accepted Answer

Both (a) and (b) are valid methods for estimating dynamic causal effects when the exogenous variable is strictly exogenous. Therefore, the best choice is to use both methods to estimate the dynamic multipliers from the ADL model and the coefficients from the distributed lag model. Having two independent methods for estimating the dynamic causal effects provides greater confidence in the results.

When Xt Is Strictly Exogenous, the Following Estimator(s)of Dynamic Causal

When X_t Is Strictly Exogenous, the Following Estimator(s)of Dynamic Causal