Enhancing the application of extreme-bounds analysis in Stata

This presentation shows and applies a new user-written Stata command, enhancedeba, that facilitates the extreme bounds analysis (EBA) methodologies proposed by Leamer (1983, 1985) and Sala-i-Martin (1997). This command is useful for robustness checks and determining whether relationships between variables are strong. Many works have used the EBA methodology first presented in Leamer (1983, 1985), for example, Levine and Renelt (1992). Sala-i-Martin (1997) modified Leamer’s approach, and his approach can be found even more frequently in many empirical studies. However, to our knowledge, no program has been developed that can efficiently execute any type of extreme bounds analysis. Although Gregorio Impavido wrote a program in 1998 that uses Leamer’s EBA approach (simply called eba), no program has been developed for the use of Sala-i-Martin’s method. Furthermore, while being useful for simple regression tasks, Impavido’s program is limited in scope. The new program, enhancedeba, presented here seeks to enhance the currently available method. It can be used for any type of cross-sectional or panel regression, can do any number of variable combinations, and can be used for both the Leamer method and the Sala-i-Martin method.