Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324415 
Year of Publication: 
2025
Series/Report no.: 
cemmap working paper No. CWP10/25
Publisher: 
Centre for Microdata Methods and Practice (cemmap), The Institute for Fiscal Studies (IFS), London
Abstract: 
We develop a new approach to estimating flexible demand models with exogenous supply-side shocks. Our approach avoids conventional assumptions of exogenous product characteristics, putting no restrictions on product entry, despite using instrumental variables that incorporate characteristic variation. The proposed instruments are model-predicted responses of endogenous variables to the exogenous shocks, recentered to avoid bias from endogenous characteristics. We illustrate the approach in a series of Monte Carlo simulations.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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