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Methodology courses typically focus on either theory or on the empirical estimation. This course aims to bridge the gap between the two by exploring several ways in which empirical studies can benefit from using theory. While it is common for theory papers to derive empirical predictions, this course will emphasize an interplay between theory and empirics starting from existing empirical work.

We will show that using theory can often be a low-hurdle approach to improving empirical exercises. Without requiring the collection of new data, theory can help overcome identification challenges, sharpen empirical specifications, derive policy implications, or supplement regressions with additional quantitative exercises. Using theory can take, for instance, the form of explicitly linking the empirics to prior theoretical work, or adding a theoretical framework (even just a single equation) to the paper.

We will discuss these possibilities in the context of actual research papers. In doing so, we will also pay attention to their evolution. Several of these papers began as purely empirical studies but later added theory to overcome specific challenges and enrich the analysis.