Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235325 
Authors: 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8955
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
Researchers use (quasi-)experimental methods to estimate how shocks affect directly treated firms and households. Such methods typically do not account for general equilibrium spillover effects. I outline a method that estimates spillovers operating among groups of firms and households. I argue that the presence of multiple types of spillovers, measurement error, and nonlinear effects can severely bias estimates. I show how instrumental variables, heterogeneity tests, and flexible functional forms can overcome different sources of bias. The analysis is particularly relevant to the estimation of spillovers following large-scale financial and business cycle shocks.
Subjects: 
general equilibrium effects
spillovers
estimation
macroeconomic shocks
financial shocks
Document Type: 
Working Paper
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