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Assessing the Impact of Financial Aids to Firms: Causal Inference in the presence of Interference

Arpino, Bruno and Mattei, Alessandra (2013): Assessing the Impact of Financial Aids to Firms: Causal Inference in the presence of Interference.

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Abstract

We consider policy evaluations when SUTVA is violated because of the presence of interference among units. We propose to explicitly model interactions as a function of units characteristics. Our approach is applied to the evaluation of a policy implemented in Tuscany (a region in Italy) on small handicraft firms. Results show that the benefits from the policy are reduced when treated firms are subject to high levels of interference. Moreover, the average causal effect is slightly underestimated when interference is ignored. These findings point to the importance of considering possible interference among units when evaluating and planning policy interventions.

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