Design-based identification with formula instruments: a review

Kirill Borusyak, Peter Hull and Xavier Jaravel

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: formula instruments; shift-share instruments; network spillovers; design-based identification (search for similar items in EconPapers)
JEL-codes: C20 C21 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2024-02-12
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in Econometrics Journal, 12, February, 2024. ISSN: 1368-4221

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http://eprints.lse.ac.uk/123848/ Open access version. (application/pdf)

Related works:
Working Paper: Design-based identification with formula instruments: A review (2023)
Working Paper: Design-Based Identification with Formula Instruments: A Review (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:123848

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