Sharp bounds on causal effects under sample selection

In many empirical problems, the evaluation of treatment effects is complicated by sample selection such that the outcome is only observed for a non-random subpopulation. In the absence of instruments and/or tight parametric assumptions, treatment effects are not point identified, but can be bounded under mild restrictions. Previous work on partial identification has primarily focused on the "always selected" (whose outcomes are observed irrespective of the treatment). This paper complements those studies by considering further populations, namely the "compliers" (whose selection states react to the treatment) and the selected population. We derive sharp bounds under various assumptions (monotonicity and stochastic dominance) and provide an empirical application to a school voucher experiment.Causal inference, principal stratification, nonparametric bounds, sample selection

Quantile Regression in the Presence of Sample Selection

Most sample selection models assume that the errors are independent of the regressors. Under this assumption, all quantile and mean functions are parallel, which implies that quantile estimators cannot reveal any (per definition non-existing) heterogeneity. However, quantile estimators are useful for testing the independence assumption, because they are consistent under the null hypothesis. We propose tests for this crucial restriction that are based on the entire conditional quantile regression process after correcting for sample selection bias. Monte Carlo simulations demonstrate that they are powerful and two empirical illustrations indicate that violations of this assumption are likely to be ubiquitous in labor economics.Sample selection, quantile regression, independence, test

Sharp IV bounds on average treatment effects under endogeneity and noncompliance

In the presence of an endogenous treatment and a valid instrument, causal effects are (nonparametrically) point identified only for the subpopulation of compliers, given that the treatment is monotone in the instrument. Further populations of likely policy interest have been widely ignored in econometrics. Therefore, we use treatment monotonicity and/or stochastic dominance assumptions to derive sharp bounds on the average treatment effects of the treated population, the entire population, the compliers, the always takers, and the never takers. We also provide an application to labor market data and briefly discuss testable implications of the instrumental exclusion restriction and stochastic dominance.Instrument, noncompliance, principal stratification, nonparametric bounds

Sophisticated and small versus simple and sizeable: When does it pay off to introduce drifting coefficients in Bayesian VARs?

We assess the relationship between model size and complexity in the time-varying parameter VAR framework via thorough predictive exercises for the Euro Area, the United Kingdom and the United States. It turns out that sophisticated dynamics through drifting coefficients are important in small data sets while simpler models tend to perform better in sizeable data sets. To combine best of both worlds, novel shrinkage priors help to mitigate the curse of dimensionality, resulting in competitive forecasts for all scenarios considered. Furthermore, we discuss dynamic model selection to improve upon the best performing individual model for each point in time

Numerical Investigation of the Aerodynamic Properties of a Flying Wing Configuration

The numerical investigations of a generic UCAV configuration are presented. These investigations are part of the DLR internal project UCAV-2010. Compressible speed conditions are considered and presented. The DLR-F17E UCAV configuration is a flying lambda delta wing with sweep angle of 53° and varying leading edge radius. The flow field of this UCAV configuration is dominated by vortex structures and vortex-to-vortex interaction. The paper aims to give a comparison between numerical- and experimental investigations in order to gain a deeper understanding of the complex flow physics. Furthermore, it will highlight the influence of Mach- and Reynolds number change on the flow and the overall aerodynamic behavior of the configuration. The DLR TAU-Code is used to simulate the flow field, using an unstructured grid and the turbulence model of Spalart-Allmaras. Forces and moment measurements taken in the DNW-TWG, Göttingen, on the DLR-F17E configuration serve as the experimental basis to validate the numerical findings. Findings on the SACCON configuration serve as a comparison case aiming to show possible portability between different model scales but also to find analogies between low speed (M=0.15) and compressible speed (M=0.5) scenarios. This paper builds up upon the finding within the NATO/RTO AVT-161 Research Task Group on “Assessment and Control Predictions for NATO Air and Sea Vehicles” and its findings shall serve as a basis for further experimental investigations of medium to high speed wind tunnel experiments. Furthermore, this paper addresses the importance of understanding and the ability to predict controlled- and uncontrolled flow separation and the interaction of vortex systems in order to estimate the aerodynamic behavior within the entire flight envelope and to meet Stability- and Control needs

Default Penalty as a Disciplinary and Selection Mechanism in Presence of Multiple Equilibria

Closed exchange and production-and-exchange economies may have multiple equilibria, a fact that is usually ignored in macroeconomic models. Our basic argument is that default and bankruptcy laws are required to prevent strategic default, and these laws can also serve to provide the conditions for uniqueness. In this paper we report experimental evidence on the effectiveness of this approach to resolving multiplicity: society can assign default penalties on fiat money so the economy selects one of the equilibria. Our data show that the choice of default penalty takes the economy to the neighborhood of the chosen equilibrium. The theory and evidence together reinforce the idea that accounting, bankruptcy and possibly other aspects of social mechanisms play an important role in resolving the otherwise mathematically intractable challenges associated with multiplicity of equilibria in closed economies. Additionally we discuss the meaning and experimental implications of default penalties that support an active bankruptcy-modified competitive equilibrium.Bankruptcy penalty, Financial institutions, Fiat money, Multiple equilibria, Experimental gaming

Does Leaving Welfare Improve Health? Evidence for Germany

Using exceptionally rich linked administrative and survey information on German welfare recipients we investigate the health effects of transitions from welfare to employment and of assignments to welfare-to-work programmes. Applying semi-parametric propensity score matching estimators we find that employment substantially increases (mental) health. The positive effects are mainly driven by males and individuals with bad initial health conditions and are largest for males with poor health. In contrast, the effects of welfare-to-work programmes, including subsidized jobs, are ambiguous and statistically insignificant for most outcomes. Robustness checks that include a semi-parametric instrumental variable approach do not provide reasons for concern.welfare programs, health effects

Does Leaving Welfare Improve Health? Evidence for Germany

Using exceptionally rich linked administrative and survey information on German welfare recipients we investigate the health effects of transitions from welfare to employment and of assignments to welfare-to-work programmes. Applying semi-parametric propensity score matching estimators we find that employment substantially increases (mental) health. The positive effects are mainly driven by males and individuals with bad initial health conditions and are largest for males with poor health. In contrast, the effects of welfare-to-work pro-grammes, including subsidized jobs, are ambiguous and statistically insignificant for most outcomes. Robustness checks that include a semi-parametric instrumental variable approach do not provide reasons for concern.Welfare programs, health effects