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Testing partial instrument monotonicity

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  • Jiang, Hongyi
  • Sun, Zhenting

Abstract

When multi-dimensional instruments are used to identify and estimate causal effects, the monotonicity condition may not hold due to heterogeneity in the population. Under a partial monotonicity condition, which only requires the monotonicity to hold for each instrument separately holding all the other instruments fixed, the 2SLS estimand can still be a positively weighted average of LATEs. In this paper, we provide a simple nonparametric test for partial instrument monotonicity. We demonstrate the good finite sample properties of the test through Monte Carlo simulations. We then apply the test to monetary incentives and distance from results centers as instruments for the knowledge of HIV status.

Suggested Citation

  • Jiang, Hongyi & Sun, Zhenting, 2023. "Testing partial instrument monotonicity," Economics Letters, Elsevier, vol. 233(C).
    • Handle: RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523004263
    DOI: 10.1016/j.econlet.2023.111400
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    References listed on IDEAS

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    More about this item

    Keywords

    Partial monotonicity; Instrument validity; Nonparametric test;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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