Dynamic Models: Econometric Considerations of Time

Gilleskie, Donna B. (2014). Dynamic Models: Econometric Considerations of Time. In Culyer, Anthony J. (Ed.), Encyclopedia of Health Economics (pp. 209-16). San Diego: Elsevier.

Gilleskie, Donna B. (2014). Dynamic Models: Econometric Considerations of Time. In Culyer, Anthony J. (Ed.), Encyclopedia of Health Economics (pp. 209-16). San Diego: Elsevier.

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Empirical health economists are likely to encounter questions regarding health and health behaviors that involve dynamics. What does one mean by dynamics? Put simply, a dynamic model of economic behavior captures the element of ‘time.’ In contrast, a static model leaves out time. More specifically, intertemporal dependence is made explicit in dynamic models. This article discusses some of the econometric methods used to estimate dynamic empirical models. To motivate these methods, the article begins with three examples of individual behaviors studied by health economists that exhibit meaningful relationships across time. Building on these examples, the article presents the econometric methods that have been used by health economists to measure dynamic relationships or behaviors that are connected over time. Much of this work attempts to recover causal effects of variables on outcomes (as opposed to mere statistical correlations) in a dynamic empirical setting. The article concludes with a description of solution and estimation of optimization problems that recover the underlying ‘primitive’ (or structural) parameters that characterize how economists model dynamic decision making.




CHAP

Encyclopedia of Health Economics


Gilleskie, Donna B.

Culyer, Anthony J.


2014



1


209-16




Elsevier

San Diego





9109

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