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Are the subsidies to private capital useful? A Multiple Regression Discontinuity Design Approach

Author

Listed:
  • Augusto Cerqua
  • Guido Pellegrini

    (Sapienza University of Rome.)

Abstract

There is still little consensus on the effectiveness of business support policies. The empirical evaluation is complicated by the difficulty in achieving reliable identification. We analyse the impact of Law 488/92, the main Italian regional policy. We propose a new approach, named multiple regression discontinuity design that exploits the sharp discontinuities in the L488 rankings and extends the RDD approach to a context where the treatment is assigned by multiple rankings with different cut-off points. We find that the impact of L488 on investment and production of the financed firms is positive and statistically significant.

Suggested Citation

  • Augusto Cerqua & Guido Pellegrini, 2011. "Are the subsidies to private capital useful? A Multiple Regression Discontinuity Design Approach," Working Papers 12, Doctoral School of Economics, Sapienza University of Rome, revised 2011.
    • Handle: RePEc:dsc:wpaper:12
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    References listed on IDEAS

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    1. Todd M. Gabe & David S. Kraybill, 2002. "The Effect of State Economic Development Incentives on Employment Growth of Establishments," Journal of Regional Science, Wiley Blackwell, vol. 42(4), pages 703-730.
    2. Marusca de Castris & Guido Pellegrini, 2012. "Evaluation of Spatial Effects of Capital Subsidies in the South of Italy," Regional Studies, Taylor & Francis Journals, vol. 46(4), pages 525-538, June.
    3. Bronzini, Raffaello & de Blasio, Guido, 2006. "Evaluating the impact of investment incentives: The case of Italy's Law 488/1992," Journal of Urban Economics, Elsevier, vol. 60(2), pages 327-349, September.
    4. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
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    Cited by:

    1. Federico Biagi & Daniele Bondonio & Alberto Martini, 2015. "Counterfactual Impact Evaluation of Enterprise Support Programmes. Evidence from a Decade of Subsidies to Italian Firm," ERSA conference papers ersa15p1619, European Regional Science Association.
    2. Annamaria Nifo & Gaetano Vecchione, 2015. "A quali imprese vanno i sussidi pubblici? evidenza dall?industria manifatturiera italiana," RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO, FrancoAngeli Editore, vol. 2015(3), pages 5-28.
    3. Alessandro Cusimano & Fabio Mazzola, 2013. "Ex-post evaluation of Territorial Integrated Projects in Italy: an empirical analysis at firm level," ERSA conference papers ersa13p1331, European Regional Science Association.
    4. Augusto Cerqua & Guido Pellegrini, 2013. "Beyond the SUTVA: how industrial policy evaluations change when we allow for interaction among firms," ERSA conference papers ersa13p340, European Regional Science Association.
    5. Carmelo Petraglia, 2011. "Il Mezzogiorno nella letteratura economica del 2011," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 4, pages 1083-1098.
    6. Berumen, Sergio A., 2012. "Evaluación del impacto de la política de incentivos sectoriales en el desarrollo de los municipios mineros de Castilla y León," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 17(33), pages 15-30.

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    More about this item

    Keywords

    multiple regression discontinuity design; policy evaluation; public subsidies; regional policy;
    All these keywords.

    JEL classification:

    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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