Part IV · Quasi-Experiments for Public Policy

Module 10. Regression Discontinuity Designs (Sharp & Fuzzy)

Exploit administrative cutoffs as local experiments, with modern bandwidths and honest diagnostics.

Local government: firm revenue at distress-score thresholds; close elections; Uruguay's PANES about 6 hours3 lessons

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Lessons

Sharp Regression Discontinuity: Grants at a Distress Threshold

· Explain why an administrative cutoff creates a local experiment
· State the continuity assumption and what would violate it
· Estimate a sharp RDD by local linear regression with different slopes on each side

· Use rdrobust for MSE-optimal bandwidths and bias-corrected robust confidence intervals
· Estimate the incumbency advantage in US House elections (Lee, Moretti and Butler)
· Run the standard robustness checks: bandwidth sensitivity, placebo cutoffs, covariate continuity

· Distinguish sharp from fuzzy designs and estimate a fuzzy RDD as IV at the cutoff
· Test for manipulation of the running variable with a density test (McCrary / rddensity)
· Interpret a density test carefully on real data with heaping and mass points