Estimating a Continuous Treatment Model with Spillovers: A Control Function Approach
Econometrics
2023-01-12 v3 Methodology
Abstract
We study a continuous treatment effect model in the presence of treatment spillovers through social networks. We assume that one's outcome is affected not only by his/her own treatment but also by a (weighted) average of his/her neighbors' treatments, both of which are treated as endogenous variables. Using a control function approach with appropriate instrumental variables, we show that the conditional mean potential outcome can be nonparametrically identified. We also consider a more empirically tractable semiparametric model and develop a three-step estimation procedure for this model. As an empirical illustration, we investigate the causal effect of the regional unemployment rate on the crime rate.
Cite
@article{arxiv.2112.15114,
title = {Estimating a Continuous Treatment Model with Spillovers: A Control Function Approach},
author = {Tadao Hoshino},
journal= {arXiv preprint arXiv:2112.15114},
year = {2023}
}