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Treatment Effects in the Regression Discontinuity Model with Counterfactual Cutoff and Distorted Running Variables

Moyu Liao

arXiv 28 Nov 2025 · Econometrics

arXiv:2511.22886 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We develop a new framework for evaluating the total policy effect in regression discontinuity designs (RDD), incorporating both the direct effect of treatment on outcomes and the indirect effect arising from distortions in the running variable when treatment becomes available. Our identification strategy combines a conditional parallel trend assumption to recover untreated potential outcomes with a local invariance assumption that characterizes how the running variable responds to counterfactual policy cutoffs. These components allow us to identify and estimate counterfactual treatment effects for any proposed threshold. We construct a nonparametric estimator for the total effect, derive its asymptotic distribution, and propose bootstrap inference procedures. Finally, we apply our framework to the Italian Domestic Stability Pact, where population-based fiscal rules generate both behavioral responses and running-variable distortions.

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Grembi, Veronica and Nannicini, Tommaso and Troiano, Ugo (2016) Do fiscal rules matter?0.87482100%
2Angrist, Joshua D and Rokkanen, Miikka (2015) Wanna get away? Regression discontinuity estimation of exam school effects away from the cutoff0.73732100%
3Dong, Yingying and Lewbel, Arthur (2015) Identifying the effect of changing the policy threshold in regression discontinuity models0.73732100%
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5Armstrong, Timothy B and Kolesár, Michal (2020) Simple and honest confidence intervals in nonparametric regression0.40511100%
6Calonico, Sebastian and Cattaneo, Matias D and Titiunik, Rocio (2014) Robust nonparametric confidence intervals for regression-discontinuity designs0.40511100%
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8Pagan, Adrian and Ullah, Aman (1999) Nonparametric econometrics0.000210%
9Jianqing Fan and Irene Gijbels (1996) Local Polynomial Modelling and Its Applications0.000110%
10Giné, Evarist and Guillou, Armelle (2002) Rates of strong uniform consistency for multivariate kernel density estimators0.000110%

Showing the top 10 of 10 scored citations.