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Spatial Decentralization and Program Evaluation: Theory and an Example from Indonesia


  • Nidhiya Menon

    () (Department of Economics, Brandeis University)

  • Mark M. Pitt

    (Brown University)


This paper proposes a novel 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 is multi-stage with respect to administrative districts and sub-districts. The spatial instrumental variables model is then estimated and tested by GMM with a single cross-section of Indonesian census data. The results offer support to the identification strategy proposed.

Suggested Citation

  • Nidhiya Menon & Mark M. Pitt, 2010. "Spatial Decentralization and Program Evaluation: Theory and an Example from Indonesia," Working Papers 16, Brandeis University, Department of Economics and International Businesss School.
  • Handle: RePEc:brd:wpaper:16

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    References listed on IDEAS

    1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," Boston College Working Papers in Economics 667, Boston College Department of Economics, revised 05 Sep 2007.
    2. Conley, Timothy G & Ligon, Ethan, 2002. "Economic Distance and Cross-Country Spillovers," Journal of Economic Growth, Springer, vol. 7(2), pages 157-187, June.
    3. Frank Kleibergen & Mark E Schaffer, 2007. "RANKTEST: Stata module to test the rank of a matrix using the Kleibergen-Paap rk statistic," Statistical Software Components S456865, Boston College Department of Economics, revised 24 Jan 2015.
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    Cited by:

    1. Portner, Claus C & Beegle, Kathleen & Christiaensen, Luc, 2011. "Family planning and fertility : estimating program effects using cross-sectional data," Policy Research Working Paper Series 5812, The World Bank.

    More about this item


    Spatial Decentralization; Program Evaluation; Instrumental Variables; Indonesia;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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