Abstract
The conclusion of the preceding chapter was that the LISREL approach can not be used to measure effects of policy, when essential information needed for the description of a set of regional systems is missing. If this is the case application of the LISREL approach (and many other approaches as well) would lead to biased estimators of the effects of the included policy and non-policy variables if the missing variables are correlated with the included explanatory variables. Furthermore, the residual variance would be biased upwards (see, among others, Theil, 1957, and Dhrymes, 1978). (Missing information in the data matrix is usually called “specification error”. Although it was defined in a more general sense above, it will be used in this particular sense in this chapter).
This chapter is partly based on Fischer and Folmer (1983).
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© 1986 Martinus Nijhoff Publishers, Dordrecht
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Folmer, H. (1986). Two-Stage Time Series Analysis. In: Regional Economic Policy. Studies in Operational Regional Science, vol 1. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-4392-6_7
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DOI: https://doi.org/10.1007/978-94-009-4392-6_7
Publisher Name: Springer, Dordrecht
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