LDV, two ways

Celia writes:

I have a question about including LDV in a model with FE.  Will the
problem of inconsistent estimates also arise if my DV is measured in
year t+3 while my LDV is measured--for economic reasons--in year t-3?
My guess is that it would only be problematic if the LDV was measured
in t+2. Could you please help clarify?

Thank you so much for your time ... and for your wonderful book!

-From a big fan of your book

What's LDV here, Celia?  We used this as shorthand for Limited
Dependent Variables, but you seem to be referencing 
Lagged Dependent Variables.
Assuming that's what you mean ... good question!
The whole FE/LDV thing is tricky.  Under some
assumptions (e.g., serially uncorrelated resids)
a model in which treatment is determined by
long-ago lagged outcomes can indeed be differenced
to kill fixed effects, with no harm done and no further ado
(as they say in Stataland).

But if selection is on an LDV,
who cares about fixed effects, anyway?!
Remember its what determines treatment that counts;
this is the TAO of OVB.

-- Master Joshway
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