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How Much Should We Trust Regression-Kink-Design Estimates?
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics, Uppsala Center for Fiscal Studies.
2013 (English)Report (Other academic)
Abstract [en]

In a Regression Kink (RK) design with a finite sample, a confounding smooth nonlinear relationship between an assignment variable and an outcome variable around a threshold can be spuriously picked up as a kink and result in a biased estimate. In order to investigate how well RK designs handle such confounding nonlinearity, I firstly implement Monte Carlo simulations and then study the effect of fiscal equalization grants on local expenditure using a RK design. Results suggest that RK estimation with a confounding nonlinearity often suffers from bias or imprecision and estimates are credible only when relevant covariates are controlled for.

Place, publisher, year, edition, pages
Uppsala: Department of Economics, Uppsala University , 2013. , 19 p.
Series
Working paper / Uppsala Center for Fiscal Studies, Uppsala University, 2013:15
Keyword [en]
Regression Kink Design, Endogenous regressors, Intergovernmental grants, Flypaper effect
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:uu:diva-210986OAI: oai:DiVA.org:uu-210986DiVA: diva2:664965
Available from: 2013-11-18 Created: 2013-11-18 Last updated: 2013-11-22Bibliographically approved

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Type fulltextMimetype application/pdf

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Ando, Michihito

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CiteExportLink to record
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Citation style
  • apa
  • ieee
  • modern-language-association
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  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
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