ABSTRACT
In previous chapters we presented, derived and applied the basic MRA model and several variations. The aim of this chapter is to discuss a few additional dimensions of its structure and application. Section 7.1 explores some of the alternative applications of MRA in economics. In certain branches of economics, most notably environmental economics, MRA is used principally to derive improved estimates of key parameters, such as the willingness to pay. In other areas, the focus of MRA is mainly on the testing of competing economic theories, while other applications of MRA concentrate on modeling the heterogeneity among empirical findings. MRA is flexible enough to accommodate all of these facets of economics and business. In Section 7.2 we discuss the choice of MRA variables when there are more variables than observations. This is followed by a brief discussion of the functional form of the MRA in Section 7.3. We then discuss the use of MRA for identifying exclusion restrictions in Section 7.4. Section 7.5 looks at the forecasting performance of MRA in both time and space. Section 7.6 investigates the treatment of effect sizes that involve MRA models with interaction and non-linear terms.
