Design-based identification with formula instruments: a review

Kirill Borusyak, Peter Hull and Xavier Jaravel

The Econometrics Journal, 2025, vol. 28, issue 1, 83-108

Abstract: SummaryMany 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)
Date: 2025
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Related works:
Working Paper: Design-based identification with formula instruments: a review (2024)
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:oup:emjrnl:v:28:y:2025:i:1:p:83-108.

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