Chapter 3 Flashcards
Correlated
Two economic variables are correlated if they move together
empirical public finance
The use of data and statistical methods to measure the impact of government policy on individuals and markets
causal
Two economic variables are causally related if the movement of one causes movement of the other.
What is an identification problem?
Given that two series are correlated, how do you identify whether one series is causing another?
randomized trial
The ideal type of experiment designed to test causality, whereby a group of individuals is randomly divided into a treatment group, which receives the treatment of interest, and a control group, which does not.
treatment group
The set of individuals who are subject to an intervention being studied.
control group
The set of individuals comparable to the treatment group who are not subject to the intervention being studied.
bias
Any source of difference between treatment and control groups that is correlated with the treatment but is not due to the treatment.
attrition
Reduction in the size of samples over time, which, if not random, can lead to bias estimates
observational data
Data generated by individual behavior observed in the real world, not in the context of deliberately designed experiments.
time series analysis
Analysis of the comovement of two series over time.
cross-sectional regression analysis
Statistical analysis of the relationship between two or more variables exhibited by many individuals at one point in time.
regression line
The line that measures the best linear approximation to the relationship between any two variables.
control variables
Variables that are included in cross-sectional regression models to account for differences between treatment and control groups that can lead to bias.
quasi-experiments
Changes in the economic environment that create nearly identical treatment and control groups for studying the effect of that environmental change, allowing public finance economists to take advantage of randomization created by external forces