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Louis PAPE (CREST) – "Dealing with Logs and Zeros in Regression Models "
Time: 03:00 pm – 4:00 pm
Date: 4th of May 2021
Louis PAPE (CREST) – “Dealing with Logs and Zeros in Regression Models”
Abstract: Log-linear models are prevalent in empirical research. Yet, how to handle zeros in the dependent variable has remained obscure. This article clarifies this issue and develops a new family of estimators, called iterated Ordinary Least Squares (iOLS), which offers multiple advantages to address the “log of zero”. We extend it to the endogenous regressors setting (i2SLS), and provide simple but effective solutions to address common issues like the inclusion of many fixed-effects. In addition, we develop specification tests to help researchers to select between alternative estimators. Finally, our methods are illustrated through numerical simulations and replications of recent publications. Joint work with Christophe Bellégo and David Benatia.
Benoît SCHMUTZ (Pôle d’économie du CREST)
Anthony STRITTMATTER Pôle d’économie du CREST)