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Defying the LATE? Identication of local treatment eects when the instrument violates monotonicity

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  • de Chaisemartin, Clement

Abstract

The instrumental variable method relies on a strong no-deers condition, which requires that the instrument aect every subject's treatment decision in the same direction. This paper shows that no-deers can be replaced by a weaker compliersdeers condition, which requires that a subgroup of compliers have the same size and the same distribution of potential outcomes as deers. This condition is necessary and sucient for IV to capture causal eects for the remaining part of compliers. In many applications, compliers-deers is a very weak condition. For instance, in Angrist & Evans (1998), 94% of DGPs compatible with the data satisfy compliers-deers, while 0% satisfy no-deers.

Suggested Citation

  • de Chaisemartin, Clement, 2013. "Defying the LATE? Identication of local treatment eects when the instrument violates monotonicity," Economic Research Papers 270439, University of Warwick - Department of Economics.
  • Handle: RePEc:ags:uwarer:270439
    DOI: 10.22004/ag.econ.270439
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    More about this item

    Keywords

    Financial Economics;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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