Design-based identification with formula instruments: a review

Borusyak, Kirill, Hull, Peter and Jaravel, Xavier (2024) Design-based identification with formula instruments: a review. Econometrics Journal. ISSN 1368-4221

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Abstract

Many studies in economics use instruments or treatments that combine a set of exogenous shocks with other predetermined variables via a known formula. Examples include shift-share instruments and measures of social or spatial spillovers. We review recent econometric tools for this setting, which leverage the assignment process of the exogenous shocks and the structure of the formula for identification. We compare this design-based approach with conventional estimation strategies based on conditional unconfoundedness, and contrast it with alternative strategies that leverage a model for unobservables.

Item Type:	Article
Official URL:	https://academic.oup.com/ectj
Additional Information:	© 2024 The Author(s)
Divisions:	Economics
Subjects:	H Social Sciences > HB Economic Theory
JEL classification:	C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C21 - Cross-Sectional Models; Spatial Models; Treatment Effect Models C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C20 - General
Date Deposited:	11 Jun 2024 14:54
Last Modified:	11 Jun 2024 14:54
URI:	http://eprints.lse.ac.uk/id/eprint/123848

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