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Annual Review of Economics

Volume 15, 2023

Local Projections for Applied Economics

Abstract

The dynamic causal effect of an intervention on an outcome is of paramount interest to applied macro- and microeconomics research. However, this question has been generally approached differently by the two literatures. In making the transition from traditional time series methods to applied microeconometrics, local projections can serve as a natural bridge. Local projections can translate the familiar language of vector autoregressions and impulse responses into the language of potential outcomes and treatment effects. There are gains to be made by both literatures from greater integration of well-established methods in each. This review shows how to make these connections and points to potential areas of further research.

Keyword(s): JEL C22, JEL C23, JEL C32, JEL C33, JEL E47, local projections, panel data, potential outcomes, vector autoregressions
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/content/journals/10.1146/annurev-economics-082222-065846
2023-09-13
2024-04-30
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/content/journals/10.1146/annurev-economics-082222-065846
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Local Projections for Applied Economics
Annual Review of Economics 15, 607 (2023); https://doi.org/10.1146/annurev-economics-082222-065846
/content/journals/10.1146/annurev-economics-082222-065846
/content/journals/10.1146/annurev-economics-082222-065846
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