nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒03‒28
three papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Make the Difference! computationally Trivial Estimators for Grouped Fixed Effects Models By Martin Mugnier
  2. To Comply or not to Comply: Persistent Heterogeneity in Tax Compliance and Macroeconomic Dynamics By Leonardo Barros Torres; Jaylson Jair da Silveira, Gilberto Tadeu Lima
  3. Price Indices for Austrian municipalities - Hedonic models based on Microlevel Data By Sabrina-Sigrid Spiegel

  1. By: Martin Mugnier (Department of Economics, CREST, ENSAE, Institut Polytechnique de Paris, France)
    Abstract: Novel estimators are proposed for linear grouped fixed effects models. Rather than predicting a single grouping of units, they deliver a collection of groupings with the same flavor as the so-called LASSO regularization path. Mild conditions are found that ensure their asymptotic guarantees are the same as the so-called grouped fixed effects and post-spectral estimators (Bonhomme and Manresa, 2015; Chetverikov and Manresa, 2021). In contrast, the new estimators are computationally straigthforward and do not require prior knowledge of the number of groups. Monte Carlo simulations suggest good finite sample performance. Applying the approach to real data provides new insights on the potential network structure of the unobserved heterogeneity.
    Keywords: panel data, grouped fixed effects, time-varying unobserved heterogeneity, k-means clustering
    JEL: C14 C23 C25
    Date: 2022–03–14
  2. By: Leonardo Barros Torres; Jaylson Jair da Silveira, Gilberto Tadeu Lima
    Abstract: We set forth an overlapping generations model in which the microdynamics of tax compliance is coupled to the macrodynamics of the economy. We specify the proportion of individuals who do not comply with their tax obligations as endogenously time-varying using the discrete choice approach, which allows considering both deterministic components and idiosyncratically subjective motivations and proclivities (such as tax morale) as drivers of tax compliance. The model replicates (and hence provides an analytical framework for a potential interpretation of) some pieces of evidence on tax evasion. First, heterogeneity in tax compliance exhibits persistence and fluctuations over the long run. Second, the proportion of non-compliant taxpayers varies positively with the tax rate and negatively with the probability of detection of tax evaders. Third, the impact of a change in the proportion of non-compliant taxpayers on the per capita output over the long run is ambiguous.
    Keywords: Tax compliance; discrete choice modeling; tax morale; heterogeneous behavior; macrodynamics
    JEL: H62 H40 C02 C62 E13
    Date: 2022–03–22
  3. By: Sabrina-Sigrid Spiegel (University of Graz, Austria)
    Abstract: Austrian municipalities must re-evaluate their real estate portfolios every year. The existing Austrian house price datasets (based on the Austrian land register) cannot fully fulfill these requirements due to a lack of descriptive variables. When constructing a hedonic model, it is vital to assemble a dataset as complete as possible to minimize the extent of the omitted variables problem. This paper shows how an existing micro-level dataset can be improved and extended to raise the data’s explanatory power. Then these data are used to compile different temporal hedonic models for the nine regional capitals of Austria. The results show that the right choice of method is essential for smaller cities with fewer transactions. For bigger cities, with more transaction data, the choice of hedonic model is less important (with all suggested model formulations giving similar results). Thus, it is vital to consider the data structure and number of transactions when compiling indices for small regions (cities).
    Keywords: housing market; house price index; hedonic regression; rolling time dummy method; average characteristics method; repricing method; stratified median.
    JEL: C43 E47
    Date: 2022–02

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