TY  - RPRT
        AU  - Eisenhauer, Philipp
AU  - Gabler, Janos
AU  - Janys, Lena
        TI  - Structural Models for Policy-Making: Coping with Parametric Uncertainty
        PY  - 2021/Apr/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 14317
        UR  - https://www.iza.org/index.php/publications/dp14317
        AB  - The ex-ante evaluation of policies using structural econometric models is based on estimated parameters as a stand-in for the truth. This practice ignores uncertainty in the counterfactual policy predictions of the model. We develop a generic approach that deals with parametric uncertainty using uncertainty sets and frames model-informed policymaking  as a decision problem under uncertainty. The seminal human capital investment model by Keane and Wolpin (1997) provides us with a well-known, influential, and empirically-grounded test case. We document considerable uncertainty in their policy predictions and highlight the resulting policy recommendations from using different formal rules on decision-making under uncertainty.
        KW  - uncertainty quantification
KW  - structural estimation
KW  - statistical decision rules
        ER  -