Partial identification of treatment response under complementarity and substitutability

Tiziano Arduini () and Edoardo Rainone
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Tiziano Arduini: Tor Vergata University

No 1473, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper studies partial identification of treatment response when the outcome of an agent is affected heterogeneously by the outcomes, and consequently the treatment statuses, of other agents in the economy. When the sign of the interactions is predicted by the theory, we propose a general approach that allows the use of comparative statics under monotonic treatment response. The paper provides new theoretical results on how the heterogeneous fixed points theorem can be applied to microfound sharp bounds on the distribution of potential outcomes. Through an empirical application we show that our method can produce narrow and meaningful bounds for the response to central bank funding of credit to the real economy, under full endogeneity of, and heterogeneous interdependence among, banks' balance sheet items.

Keywords: treatment effects; spillovers; partial identification; monotone comparative statics (search for similar items in EconPapers)
JEL-codes: C31 D71 E58 (search for similar items in EconPapers)
Date: 2024-12
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