Regression Discontinous Design as Policy Assessment Tool - Problems and Possibilities

  • Jan Cadil Unicorn College, Prague
  • David Hartman Unicorn College, Prague
  • Petr Hajek Unicorn College, Prague
Keywords: Regression Discontinous Design, Propensity Score Matching, Contrafactual Impact Analysis, Cohesion Policy

Abstract

The contemporary economic policy is using variety of tools. Some of them focus on support of chosen groups of agents. This is the case of EU policies, namely the Cohesion Policy. Therefore it is necessary to analyze the impact of such support on affected groups. One of the widely used analytical tools is Regression Discontinous Design (RDD). European Union has started to utilize the RDD  in combination with Propensity Score Matching (PSM) quite recently and is trying to use this tool as a basic method for Contrafactual Impact Analysis (CIA). Although the RDD is a sophisticated and well documented method its application might be quite difficult. We face standard problems related to this method like the proper groups matching but regarding the Cohesion Policy we face some new problems as well. One of the most serious ones is the issue of different regional price levels which  affects the assessment process and should be dealt with. Otherwise we could get spurious results.

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Published
2011-06-01
Issue
Vol 2 (2011)
Section
Articles
Copyright (c) 2011 Jan Cadil, David Hartman, Petr Hajek

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