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#1496.

Nicholas Brown, Kyle Butts, Joakim Westerlund

Difference-in-Differences via Common Correlated Effects

We study the effect of treatment on an outcome when parallel trends hold conditional on an interactive fixed effects structure. In contrast to the majority of the literature, we propose identification using time-varying covariates. We assume the untreated outcomes and covariates follow a common correlated effects (CCE) model, where the covariates are linear in the same common time effects. We then demonstrate consistent estimation of the treatment effect coefficients by imputing the untreated potential outcomes in post-treatment time periods. Our method accounts for treatment affecting the…

#1495.

Nicholas Brown, Kyle Butts

A Unified Framework for Dynamic Treatment Effect Estimation in Interactive Fixed Effect Models

We present a unifying identification strategy of dynamic average treatment effect parameters for staggered interventions when parallel trends are valid only after controlling for interactive fixed effects. This setting nests the usual parallel trends assumption, but allows treated units to have heterogeneous exposure to unobservable macroeconomic trends. We show that any estimator that is consistent for the unobservable trends up to a non-singular rotation can be used to consistently estimate heterogeneous dynamic treatment effects. This result can apply to data sets with either many or…

#1494.

Nicholas Brown

Information Equivalence Among Transformations of Semiparametric Nonlinear Panel Data Models

This paper considers transformations of nonlinear semiparametric mean functions that yield moment conditions for estimation. Such transformations are said to be information equivalent if they yield the same asymptotic efficiency bound. I derive a unified theory of algebraic equivalence for moment conditions created by a given linear transformation. The main equivalence result states that under standard regularity conditions, transformations that create conditional moment restrictions in a given empirical setting need only to have an equal rank to reach the same efficiency bound. Examples…

#1493.

Seyedmajid Hashemi, Glenn Jenkins, Frank Milne

Rooftop Solar with Net Metering: An Integrated Investment Appraisal

This paper develops a framework for a financial, economic, and stakeholder analysis of a residential rooftop solar net-metering program. The empirical focus of the paper is the net-metering program in Ontario, Canada, but the methodology is applicable to evaluating other public programs. The results highlight that without the Federal Government’s subsidy for the initial investment cost, net-metered solar systems are not financially viable for representative households. Moreover, the…

#1492.

Christopher Cotton, Ardyn Nordstrom, jordan_naowski_wp, Eric Richert

Can Dialogues Around Girls' Education Improve Academic Outcomes? Evidence from a Randomized Development Project

We evaluate the impact of deliberative dialogues about girls' education with groups of parents, teachers, and girls on the education outcomes of girls in rural Zimbabwe. Dialog-based engagement campaigns increased mathematics performance and school enrolment. In later periods, the program was expanded to provide resources and an updated curriculum. During these later periods, we observed improvements in literacy, but no additional improvements in mathematics and enrolment beyond what was observed following the dialog-based engagement campaign alone. A mediation analysis shows how earlier…

#1491.

Nicholas Brown, Joakim Westerlund

TESTING FACTORS IN CCE

One of the most popular estimators of interactive effects panel data models is the common correlated effects (CCE) approach, which uses the cross-sectional averages of the observables as proxies of the unobserved factors. The present paper proposes a simple test that is suitable for testing hypotheses about the factors in CCE and that is valid provided only that the number of cross-sectional units is large. The new test can be used to test if a subset of the averages is enough to proxy the factors, or if there are observable variables that capture the factors. The test can also be used…

#1490.

Jonathan Chiu, Thorsten V. Koeppl

PayTech and the D(ata) N(etwork) A(ctivities) of BigTech Platforms

Why do BigTech platforms introduce payment services? Digital platforms often run business models where activities on the platform generate data that can be monetized off the platform. There is a trade-o between the value of such data and the privacy concerns of users, since platforms need to compensate users for their privacy loss by subsidizing activities. The nature of complementarities between data and payments determines the introduction of payments. When data help to provide better payments (data-driven payments), platforms have too little incentives to adopt. When payments generate…

#1489.

Jonathan Chiu, Thorsten V. Koeppl, Charles M Kahn

Grasping De(centralized) Fi(nance) through the Lens of Economic Theory

In this viewpoint article, we provide an analysis of the value proposition of De(centralized) Fi(nance) and its limitations using a simple stylized model of collateralized lending. DeFi uses a decentralized ledger to run smart contracts that automatically enforce the terms of a lending contract and safeguard the collateral. DeFi can lower the costs associated with intermediated lending and improve nancial inclusion. Limitations are the volatility of crypto collateral and stablecoins used for settlement, the possible incompleteness of smart contracts and the lack of a reliable oracle. A…

#1488.

James McNeil, Gregor W. Smith

The All-Gap Phillips Curve

The all-gap Phillips curve (PC) explains inflation by expected inflation and an activity variable such as output or the unemployment rate, but with both inflation and the activity variable measured relative to their stochastic trends and thus as gaps. We study this relationship with minimal auxiliary assumptions and under rational expectations (RE). We show restrictions on an unobserved-components model that identify the Phillips curve parameters, first with an autonomous…

Events

Nicolas Ajzenman

2023 February 06

Research

Affiliation: McGill University

Title: TBA

Min Fang

2023 February 15

Research

Affiliation: University of Florida (currently visiting University of Toronto).

Title: TBA