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Beyond correlation: measuring interdependence through complementarities

Abstract:

Given two sets of random variables, how can one determine whether the former variables are more interdependent than the latter? This question is of major importance to economists, for example, in comparing how various policies affect systemic risk or income inequality. Moreover, correlation is ill-suited to this task as it is typically not justified by any economic objective. Economists' interest in interdependence often stems from complementarities (or substitutabilities) in the environment ...

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Publication status:
Published

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Publisher:
University of Oxford Publisher's website
Series:
Department of Economics Discussion Paper Series
Publication date:
2013-05-22
Paper number:
655
Keywords:
Pubs id:
1143762
Local pid:
pubs:1143762
Deposit date:
2020-12-15

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