Are the Subsidies to Private Capital Useful? A Multiple Regression Discontinuity Design Approach

Sapienza University of Rome Economics Working Paper No. 12

45 Pages Posted: 31 May 2013

See all articles by Augusto Cerqua

Augusto Cerqua

University of Westminster

Guido Pellegrini

University of Rome I

Date Written: April 19, 2011

Abstract

There is still little consensus on the effectiveness of business support policies. The empirical evaluation is complicated by the difficulty in achieving reliable identification. We analyse the impact of Law 488/92, the main Italian regional policy. We propose a new approach, named multiple regression discontinuity design that exploits the sharp discontinuities in the L488 rankings and extends the RDD approach to a context where the treatment is assigned by multiple rankings with different cut-off points. We find that the impact of L488 on investment and production of the financed firms is positive and statistically significant.

Keywords: multiple regression discontinuity design, policy evaluation, public subsidies, regional policy

JEL Classification: R38, C14, H71

Suggested Citation

Cerqua, Augusto and Pellegrini, Guido, Are the Subsidies to Private Capital Useful? A Multiple Regression Discontinuity Design Approach (April 19, 2011). Sapienza University of Rome Economics Working Paper No. 12, Available at SSRN: https://ssrn.com/abstract=2272685 or http://dx.doi.org/10.2139/ssrn.2272685

Augusto Cerqua (Contact Author)

University of Westminster ( email )

35 Marylebone Road
London, NW1 5LS
United Kingdom

Guido Pellegrini

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

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