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Partial identification of treatment response under complementarity and substitutability

Author

Listed:
  • Tiziano Arduini

    (Tor Vergata University)

  • Edoardo Rainone

    (Bank of Italy)

Abstract

This paper studies partial identification of treatment response when the outcome of an agent is affected heterogeneously by the outcomes, and consequently the treatment statuses, of other agents in the economy. When the sign of the interactions is predicted by the theory, we propose a general approach that allows the use of comparative statics under monotonic treatment response. The paper provides new theoretical results on how the heterogeneous fixed points theorem can be applied to microfound sharp bounds on the distribution of potential outcomes. Through an empirical application we show that our method can produce narrow and meaningful bounds for the response to central bank funding of credit to the real economy, under full endogeneity of, and heterogeneous interdependence among, banks' balance sheet items.

Suggested Citation

  • Tiziano Arduini & Edoardo Rainone, 2024. "Partial identification of treatment response under complementarity and substitutability," Temi di discussione (Economic working papers) 1473, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1473_24
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2024/2024-1473/en_tema_1473.pdf
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    More about this item

    Keywords

    treatment effects; spillovers; partial identification; monotone comparative statics;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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