| 00:00 - 00:03 | We are now ready to present our identification strategy |
| 00:04 - 00:05 | We used a natural experiment |
| 00:05 - 00:07 | from the fall of the Berlin Wall |
| 00:08 - 00:12 | to obtain exogenous variation in access to markets |
| 00:12 - 00:15 | for both new and used West-German automobiles. |
| 00:17 - 00:19 | I assume the model |
| 00:19 - 00:21 | is estimated using NFXP |
| 00:24 - 00:26 | My Führer... |
| 00:27 - 00:28 | Stata... |
| 00:31 - 00:33 | Stata does not have NFXP |
| 00:34 - 00:36 | We used standard diffs in diffs |
| 00:53 - 00:58 | If you agree inference without theory is blind. Please leave the room |
| 01:13 - 01:15 | Are you completely out of your mind? |
| 01:15 - 01:17 | Have you never heard of Harold Zurcher? |
| 01:18 - 01:23 | Even a student can estimate this simple model |
| 01:25 - 01:28 | It is a simple combination of the BHHH algorithm |
| 01:29 - 01:31 | and Newton-Kantorovich iterations |
| 01:31 - 01:34 | You just need to use the implicit function theorem |
| 01:34 - 01:37 | and the Frechet derivative of the Bellman operator |
| 01:37 - 01:40 | is so simple to compute for this model. |
| 01:40 - 01:42 | But we have to submit our paper to the QJE |
| 01:42 - 01:46 | Even QJE can see that this is completely useless econometrics. |
| 01:46 - 01:48 | My Führer, I'm soon up for tenure. |
| 01:48 - 01:52 | Econometric work requires hard work |
| 01:53 - 01:54 | You need economic theory! |
| 01:56 - 01:57 | Go study some econometrics |
| 01:57 - 02:00 | and try to understand data and institutions |
| 02:00 - 02:03 | and learn numerical methods and computer programming |
| 02:04 - 02:08 | Then let's talk about whether your so-called identification strategy |
| 02:08 - 02:13 | can tell us anything about the German automobile market |
| 02:14 - 02:16 | A car is a durable asset. |
| 02:17 - 02:21 | What did you think off. Stalin knew how to produce cars. |
| 02:27 - 02:29 | How can you ignore that? |
| 02:30 - 02:34 | Consumers are heterogeneous, forward looking and trade with each other |
| 02:34 - 02:36 | This is a dynamic equilibrium. |
| 02:41 - 02:42 | SUTVA does not hold. |
| 02:43 - 02:47 | How could you even consider any treatment effects approach |
| 02:48 - 02:53 | You need to start coding the dynamic program now! |
| 02:54 - 02:56 | This problem is easily done in MATLAB. |
| 02:56 - 02:59 | No fancy GPU computing, OpenMP or HPC of any kind. |
| 03:00 - 03:02 | I can code this while driving my Volvo. |
| 03:04 - 03:07 | Don't worry, BLP is OK |
| 03:14 - 03:16 | Start with Harold Zurcher |
| 03:19 - 03:23 | Just a few car types and a finite number of vintages |
| 03:25 - 03:26 | Add transactions costs |
| 03:31 - 03:33 | Allow for driving and fuel taxation |
| 03:40 - 03:46 | Then consider flexible specifications of car characteristics |
| 03:46 - 03:49 | Add some more heterogeneity and impose equilibrium |
| 03:53 - 03:56 | Estimate using NFXP and run counterfactuals |
