Methodological Issues in Analyzing Market Dynamics / Ariel Pakes.

Format:

Book

Author/Creator:

Pakes, Ariel.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21999.

NBER working paper series no. w21999

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

This paper investigates progress in the development of models capable of empirically analyzing the evolution of industries. It starts with a parallel between the development of empirical frameworks for static and dynamic analysis of industries: both adapted their frameworks from models taken from economic theory. The dynamic framework has had its successes: it led to developments that have enabled us to control for dynamic phenomena in static empirical models and to useful computational theory. However when important characteristics of industries were integrated into that framework it generated complexities which both hindered empirical work on dynamics per se, and made it unrealistic as a model of agent behavior. This paper suggests a simpler alternative paradigm, one which need not maintain all the traditional theoretical restrictions, but does maintain the core theoretical idea of optimizing subject to an information set. It then discusses estimation, computation, and an example within that paradigm.

Notes:

Print version record

February 2016.