Given a binary treatment D, a response Y and covariates X, often X interacts with D in an unknown way to make the treatment effect heterogeneous. If D is exogenous, there are various semi-parametric approaches (matching, inverse probability weighting, etc.) to estimate a weighted average of the...

In this article, I develop a novel identification result for estimating the effect of an endogenous treatment using a proxy of an unobserved imperfect instrument. I show that the potential outcomes distributions are partially identified for the compliers. Therefore, I derive sharp bounds on the...

This paper considers the estimation of dynamic causal effects using external instruments and a structural vector-autoregressive model with possibly non-stationary regressors. We provide general conditions under which the asymptotic normal approximation remains valid. In this case, the asymptotic...

Given a binary treatment D, a response Y with its potential versions (Y⁰,Y¹) and covariates X, often D is endogenous. Unless Y is continuous, dealing with a binary endogenous D has been difficult even when an instrument δ is available. This paper shows that, for any form of Y (binary,...

The Great Recession and its aftermath saw the worst relative performance of young firms in at least 35 years. More broadly, as we show, young-firm activity shares move strongly with local economic conditions and local house price growth. In this light, we assess the effects of housing prices and...

Abstract How do shocks to economic fundamentals in the world economy affect local labor markets? In a framework with a flexible structure of spatial linkages, we characterize the model-consistent shock exposure of a local market as the exogenous shift in its production revenues and consumption...

This paper estimates the causal effect of fiscal rules on fiscal balances in a panel of 142 countries over the period 1985-2015. Our instrumental variable strategy exploits the geographical diffusion of fiscal rules across countries. The intuition is that reforms in neighboring countries may...