Boosting Empirics with Theory

Lecturer: Professor Dr Wolf Wagner (Rotterdam School of Management)
Date: October 08-11, 2024
Venue: OvGU Magdeburg, Faculty of Economics and Management, Universitätsplatz 2, 39106 Magdeburg, room A-225 (faculty center)
Registration: until September 30, 2024 via email: michael.kvasnicka@ovgu.de

Announcement: pdf

Overview and Objectives
Methodology courses typically focus on either theory or on the empirical estimation. This course aims to bridge the gap between the two by exploring several ways in which empirical studies can benefit from using theory. While it is common for theory papers to derive empirical predictions, this course will emphasize an interplay between theory and empirics starting from existing empirical work.

We will demonstrate that using theory can often be a low-hurdle approach to improving empirical exercises. Without requiring the collection of new data, theory can help overcome identification challenges, sharpen empirical specifications, derive policy implications, or supplement regressions with additional quantitative exercises. Using theory can take, for instance, the form of explicitly linking the empirics to prior theoretical work, or adding a theoretical framework (even just a single equation) to the paper.

We will discuss these possibilities in the context of actual research papers. In doing so, we will also pay attention to their evolution. Several of these papers began as purely empirical studies but later added theory to overcome specific challenges and enrich the analysis.

Schedule
Tuesday, October 8, 2024
9:00-10:30, 11:00-12:30, 13:30-15:00

Wednesday, October 9, 2024
9:00-10:30, 11:00-12:30, 13:30-15:00

Thursday, October 10, 2024
9:00-10:30, 11:00-12:30, 13:30-15:00

Friday, October 11, 2024
9:00-10:30, 11:00-12:30, 13:30-15:00

Prerequisites
Participants should be familiar with basic concepts of statistics and econometrics, especially linear regression and hypothesis testing.

Grading
Course grades will be determined through a final presentation (details to be discussed).

Course Outline
– Clarifying the economic mechanism and creating testable implications.
– Using theory to overcome identification challenges.
– Creating policy counterfactuals.
– “Taking coefficients seriously”.