Welfare gains of the poor: An endogenous Bayesian approach with spatial random effects

Andrés Ramírez Hassan () and Santiago Montoya-Blandón

No 13678, Documentos de Trabajo de Valor Público from Universidad EAFIT

Abstract: We introduce a Bayesian instrumental variable procedure with spatial random effects that handles endogeneity, and spatial dependence with unobserved heterogeneity. We find through a limited Monte Carlo experiment that our proposal works well in terms of point estimates and prediction. Then, we apply our method to analyze the welfare effects on the poorest households generated by a process of electricity tariff unification. In particular, we deduce an Equivalent Variation measure where there is a budget constraint for a two-tiered pricing scheme, and find that 10% of the poorest municipalities attained welfare gains above 2% of their initial income.

Keywords: Bayesian Estimation, Endogeneity, Instruments, Simultaneous Equations; Spatial Random Effects; Welfare Analysis (search for similar items in EconPapers)
JEL-codes: C11 C15 D11 D12 D60 (search for similar items in EconPapers)
Pages: 42
Date: 2015-07-07
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Related works:
Journal Article: Welfare gains of the poor: An endogenous Bayesian approach with spatial random effects (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000122:013678

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