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Dave
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This might be a basic question, but I want to be sure that what I'm doing is right. I have a model that suggests that variable X causes both Y and Z. When I regress Y on X, or Z on X, I get positive and significant coefficients as expected.

Now, when I regress Z on Y, I still get a positive significant coefficient.

Question 1: is this an omitted variable bias?

Question 2: is it legitimate to regress Z on Y and X to test whether the relationship between Z and Y is spurious?

Question 3: if it is legitimate and if I get positive significant coefficients on both Y and X what does that mean? Does it mean "X causes Y and Z, but Y still has marginal explanatory power on Z"?

Many thanks, Dave

This might be a basic question, but I want to be sure that what I'm doing is right. I have a model that suggests that variable X causes both Y and Z. When I regress Y on X, or Z on X, I get positive and significant coefficients as expected.

Now, when I regress Z on Y, I still get a positive significant coefficient.

Question 1: is this an omitted variable bias?

Question 2: is it legitimate to regress Z on Y and X to test whether the relationship between Z and Y is spurious?

Question 3: if it is legitimate and if I get positive coefficients on both Y and X what does that mean? Does it mean "X causes Y and Z, but Y still has marginal explanatory power on Z"?

Many thanks, Dave

This might be a basic question, but I want to be sure that what I'm doing is right. I have a model that suggests that variable X causes both Y and Z. When I regress Y on X, or Z on X, I get positive and significant coefficients as expected.

Now, when I regress Z on Y, I still get a positive significant coefficient.

Question 1: is this an omitted variable bias?

Question 2: is it legitimate to regress Z on Y and X to test whether the relationship between Z and Y is spurious?

Question 3: if it is legitimate and if I get positive significant coefficients on both Y and X what does that mean? Does it mean "X causes Y and Z, but Y still has marginal explanatory power on Z"?

Many thanks, Dave

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Dave
  • 33
  • 4

Causality, omitted variable bias

This might be a basic question, but I want to be sure that what I'm doing is right. I have a model that suggests that variable X causes both Y and Z. When I regress Y on X, or Z on X, I get positive and significant coefficients as expected.

Now, when I regress Z on Y, I still get a positive significant coefficient.

Question 1: is this an omitted variable bias?

Question 2: is it legitimate to regress Z on Y and X to test whether the relationship between Z and Y is spurious?

Question 3: if it is legitimate and if I get positive coefficients on both Y and X what does that mean? Does it mean "X causes Y and Z, but Y still has marginal explanatory power on Z"?

Many thanks, Dave