pyRVtest.Problem.solve

Problem.solve(demand_adjustment=False, clustering_adjustment=False)

Solve the problem.

Given demand estimates from PyBLP, we compute implied markups for each model \(m\) being tested. Marginal cost is a linear function of observed cost shifters and an unobserved shock.

The rest of the testing procedure is done for each pair of models, for each set of instruments. A GMM measure of fit is computed for each model-instrument pair. This measure of fit is used to construct the test statistic.

Parameters

  • demand_adjustment (Optional[bool]) – (optional, default is False) Configuration that allows user to specify whether to compute a two-step demand adjustment. Options are True or False.

  • clustering_adjustment (Optional[str]) – (optional, default is unadjusted) Configuration that specifies whether to compute clustered standard errors. Options are True or False.

Returns

ProblemResults of the solved problem.

Return type

ProblemResults