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The treatment-effect estimation: A case study of the 2008 economic stimulus package of China

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  • Ouyang, Min
  • Peng, Yulei

Abstract

Researchers often face the challenge of estimating the counterfactuals to evaluate the treatment effects. Hsiao et al. (2012) propose a method that offers more flexibilities by allowing the influence of the unobservable latent factors to vary cross-section. This paper relaxes the linear conditional mean assumption in their method by extending it to a semi-parametric setting. The asymptotic distribution properties of the average treatment effect estimator is derived and studied. The semi-parametric model and the Hsiao et al. (2012) are both applied to study the macroeconomic effect of the 2008 Chinese Economic Stimulus Program. The estimation results show the fiscal stimulus plan had raised the annual real GDP growth in China by about 3.2%, but only temporarily. These results are robust to linear setting, semiparametric setting, and various control group selections. The temporary boost in economic activities of the stimulus plan is also evident in the estimation of other economic indicators such as real investment, real consumption, real export, and real import.

Suggested Citation

  • Ouyang, Min & Peng, Yulei, 2015. "The treatment-effect estimation: A case study of the 2008 economic stimulus package of China," Journal of Econometrics, Elsevier, vol. 188(2), pages 545-557.
    • Handle: RePEc:eee:econom:v:188:y:2015:i:2:p:545-557
    DOI: 10.1016/j.jeconom.2015.03.017
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    References listed on IDEAS

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    1. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-954, July.
    2. Jushan Bai & Serena Ng, 2002. "Determining the Number of Factors in Approximate Factor Models," Econometrica, Econometric Society, vol. 70(1), pages 191-221, January.
    3. Cheng Hsiao & H. Steve Ching & Shui Ki Wan, 2012. "A Panel Data Approach For Program Evaluation: Measuring The Benefits Of Political And Economic Integration Of Hong Kong With Mainland China," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(5), pages 705-740, August.
    4. Bai, ChongEn & Li, Qi & Ouyang, Min, 2014. "Property taxes and home prices: A tale of two cities," Journal of Econometrics, Elsevier, vol. 180(1), pages 1-15.
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    More about this item

    Keywords

    Treatment effects; Stationary data; 2008 fiscal stimulus plan of China; Parametric estimation; Semi-parametric estimation;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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