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Econometrics for Daily Lives, Volume II by Tam Bang Vu

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CHAPTER 11

Regression Discontinuity and Differences-in-Differences

Booka tells us that two years ago, China imposed a ban on several books exported by her company. She wonders how she can estimate the impact this ban has on her company’s profits. Prof. Metric says that we will discuss this and other issues in this chapter. Upon finishing the chapter, we should be able to:

1. Analyze the econometric method of Regression Discontinuity (RD) design.

2. Explain the conditions for difference-in-differences (DD) estimations.

3. Apply dummy and panel techniques learned in earlier chapters into DD estimations.

4. Perform RD and DD estimations using Excel.

RD Design

Worldwide public and private institutions set certain rules that affect human behavior. ...

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