Nidhiya Menon - Spatial Decentralization and Program Evaluation: Theory and an Example

Melbourne Institute Seminar Series

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Title: Spatial Decentralization and Program Evaluation: Theory and an Example

Abstract: This paper proposes an instrumental variable method for program evaluation that only requires a single cross-section of data on the spatial intensity of programs and outcomes. The instruments are derived from a simple theoretical model of government decision-making in which governments are responsive to the attributes of places and their populations, rather than to the attributes of individuals, in making allocation decisions across space, and have a social welfare function that is spatially weakly separable, that is, that the budgeting process behaves as if it is multi-stage with respect to administrative districts and sub-districts. The spatial instrumental variables model is then estimated and tested with a single cross-section of Indonesian census data.  The results offer support to the identification strategy proposed but also highlight some critical issues affecting validity.

Presenter: Nidhiya Menon, Brandeis University

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