EconPapers    
Economics at your fingertips  
 

How Much Should We Trust Regression-Kink-Design Estimates?

Michihito Ando

No 2013:22, Working Paper Series from Uppsala University, Department of Economics

Abstract: In a Regression Kink (RK) design with a finite sample, a confounding smooth nonlinear relationship between an assignment variable and an outcome variable around a threshold can be spuriously picked up as a kink and result in a biased estimate. In order to investigate how well RK designs handle such confounding nonlinearity, I firstly implement Monte Carlo simulations and then study the effect of fiscal equalization grants on local expenditure using a RK design. Results suggest that RK estimation with a confounding nonlinearity often suffers from bias or imprecision and estimates are credible only when relevant covariates are controlled for.

Keywords: Regression Kink Design; Endogenous regressors; Intergovernmental grants; Flypaper effect (search for similar items in EconPapers)
JEL-codes: C13 C21 H71 H72 H77 (search for similar items in EconPapers)
Date: 2013-11-11
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://uu.diva-portal.org/smash/get/diva2:667602/FULLTEXT01.pdf (application/pdf)

Related works:
Journal Article: How much should we trust regression-kink-design estimates? (2017) Downloads
Working Paper: How Much Should We Trust Regression-Kink-Design Estimates? (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:2013_022

Access Statistics for this paper

More papers in Working Paper Series from Uppsala University, Department of Economics Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Katarina Grönvall ().

 
Page updated 2018-11-04
Handle: RePEc:hhs:uunewp:2013_022