Jales paper on discontinuity in density published in Journal of Business & Economic Statistics
Jul 4, 2019
Jun Ma, Hugo Jales & Zhengfei Yu
Journal of Business and Economic Statistics, July 2019
An important special case is the manipulation testing problem in a regression discontinuity design (RDD), where the parameter of interest is the density difference at a known threshold. In RDD, the continuity of the density of the assignment variable at the threshold is considered as a “no-manipulation” behavioral assumption, which is a testable implication of an identifying condition for the local average treatment effect. When specialized to the manipulation testing problem, the CE-optimal bandwidth selector has an explicit form. The authors propose a data-driven CE-optimal bandwidth selector for use in practice. Results from Monte Carlo simulations are presented. Usefulness of their method is illustrated by an empirical example.