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Working Paper
A Market Interpretation of Treatment Effects
Markets, likened to an invisible hand, often appear to contradict econometric assumptions that rule out spillovers of one person’s treatment on another’s outcomes. This paper provides a simple statistical framework highlighting that controls are indirectly affected by the treatment through the market. Further, the effect of the treatment on the treated reveals only part of the consequence for the treated of treating the entire market. When combined with economic theory, our framework leads to a new application of Marshall’s Laws of Derived Demand that relates econometric estimates of ...
Working Paper
Difference-in-Differences in the Marketplace
Price theory says that the most important effects of policy and technological change are often found beyond their first point of contact. This appears opposed to econometric methods that rule out spillovers of one person's treatment on another's outcomes. This paper uses the industry model from price theory to represent the statistical concepts of treatments and controls. When treated and control observations are in the same market, the controls are indirectly affected by the treatment. Moreover, even the effect of the treatment on the treated reveals only part of the consequence for the ...
Discussion Paper
Detecting Tariff Effects on Consumer Prices in Real Time
Economic researchers and forecasters face the difficult task of differentiating the effects of tariffs on consumer prices from the effects of other factors—such as inflation expectations, supply chain disruptions, labor market tightness, and energy prices—which may influence prices independently. The methods available for this task in the economics literature, however, are not suitable for assessing tariffs' effects on consumer prices in real time.