how to estimate a model when the dependent variable is measured using different units

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Bilal Nabeel Falah
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Joined: Tue Jun 05, 2018 8:39 am
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how to estimate a model when the dependent variable is measured using different units

Post by Bilal Nabeel Falah » Mon Jun 25, 2018 10:26 am

Hello PMMAs,
I hope things are well on your side.

I am doing an assignment, not related to my PMMA project, on estimating the impact of raising tariff on imports. A few years ago, the Palestinian government raised tariff on selected goods in an attempt to increase their local market share. They include footwear, furniture, and clothes. To carry out the analysis, I am doing Diff-in-Diff model using imported goods that are not affected by the policy as controlled group.

I ideally, one would think of measuring the dependent variable using value of import per good or unit price. Nonetheless, this approach may not be appropriate in my case as importers tend to under-report their import bill to minimize their tax payment. With the tariff policy in place, importers of the treated goods (those affected by the tariff policy)may further under-report their import bill to avoid the increase in tariff.

Alternatively, I can use physical units as a measurement of the dependent variable. But the problem is that the imported goods (both in the treated and controlled group) are measured differently;in KG, pairs, or number of units. Worse; for the same good, there are different measurements (KG and pairs).

Any idea how to deal with estimating a model when the dependent variable is measured in such a fashion (different units of measurements)?

I appreciate your help!

Best

Bilal

Manuel Paradis PEP
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Re: how to estimate a model when the dependent variable is measured using different units

Post by Manuel Paradis PEP » Wed Jun 27, 2018 12:01 pm

Hi Bilal, thank you for the question. The PMMA team will get back to you shortly.

Bilal Nabeel Falah
Posts: 3
Joined: Tue Jun 05, 2018 8:39 am
Contact:

Re: how to estimate a model when the dependent variable is measured using different units

Post by Bilal Nabeel Falah » Sun Jul 08, 2018 12:29 pm

Hello Manuel,
I hope things are well at your side!

I wonder if you have received a feed back on my question?

Best
Bilal

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