The importance of truncated distributions for bias in estimation is demonstrated for a Japanese policy reaction function. Due to the proximity of a zero lower bound (ZLB) on interest rates, coefficient estimates can be biased upwards. This paper illustrates the importance of measuring and...

We give two new approaches to testing conditional exogeneity. This condition ensures unconfoundedness and identification of structural effects. Our approaches permit the presence of treatment effects under the null, thereby complementing methods of Rosenbaum (1987) and Heckman and Hotz (1989).