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Specification Tests in Econometrics

1978/11/01 by J. A. Hausman, Jerry A. Hausman · 189 citations
Economics, Econometrics and Finance · Mathematics · Decision Sciences · #Spatial and Panel Data Analysis #Statistical Methods and Inference #Efficiency Analysis Using DEA

paper · doi:10.2307/1913827

Abstract

Using the result that under the null hypothesis of no misspecification an asymptotically efficient estimator must have zero asymptotic covariance with its difference from a consistent but asymptotically inefficient estimator, specification tests are devised for a number of model specifications in econometrics. Local power is calculated for small departures from the null hypothesis. An instrumental variable test as well as tests for a time series cross section model and the simultaneous equation model are presented. An empirical model provides evidence that unobserved individual factors are present which are not orthogonal to the included right-hand-side variable in a common econometric specification of an individual wage equation.

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