Luca Moreno-Louzada, Guilherme Figueira, Pedro Picchetti
arXiv 10 Dec 2025 · Econometrics
arXiv:2512.10076 · PDF · DOI · OpenAlex · Extracted main text
This paper studies regional exposure designs that use commodity prices as instruments to study local effects of aggregate shocks. Unlike standard shift share designs that leverage differential exposure to many shocks, the price exposure relies on exogenous variation from a single shock, leading to challenges for both identification and inference. We motivate the design using a multi sector labor model. Under the model and a potential outcomes framework, we characterize the 2SLS and TWFE estimands as weighted averages of region and sector specific effects plus contamination terms driven by the covariance structure of prices and by general-equilibrium output responses. We derive conditions under which these estimands have a clear causal interpretation and provide simple sensitivity analysis procedures for violations. Finally, we show that standard inference procedures suffer from an overrejection problem in price-exposure designs. We derive a new standard error estimator and show its desirable finite-sample properties through Monte Carlo simulations. In an application to gold mining and homicides in the Amazon, the price exposure standard errors are roughly twice as large as conventional clustered standard errors, making the main effect statistically insignificant.
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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.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Sviatschi, Maria Micaela (2022) Making a narco: Childhood exposure to illegal labor markets and criminal life paths | 0.874 | 9 | 2 | 100% |
| 2 | Dube, Oeindrila. and Vargas, Juan F (2013) Commodity price shocks and civil conflict: Evidence from Colombia | 0.874 | 8 | 2 | 100% |
| 3 | Blandhol, Christine and Bonney, John and Mogstad, Magne and Torgovit… (2022) When is TSLS actually late? | 0.737 | 3 | 2 | 100% |
| 4 | Pereira, Leila and Pucci, Rafael (2024) A Tale of Gold and Blood: The Consequences of Market Deregulation on Local Violence | 0.644 | 4 | 1 | 100% |
| 5 | Adão, Rodrigo and Kolesár, Michal and Morales, Eduardo (2019) Shift-share designs: Theory and inference | 0.511 | 2 | 1 | 100% |
| 6 | Balza, Lenin H and De Los Rios, Camilo and Mori, Raul Jimenez and Ma… (2025) The local human capital costs of oil exploitation | 0.511 | 2 | 1 | 100% |
| 7 | Berman, Nicolas and Couttenier, Mathieu and Rohner, Dominic and Thoe… (2017) This Mine is Mine! How Minerals Fuel Conflicts in Africa | 0.511 | 2 | 1 | 100% |
| 8 | Borusyak, Kirill and Hull, Peter (2023) Nonrandom exposure to exogenous shocks | 0.511 | 2 | 1 | 100% |
| 9 | Carrillo, Bladimir (2020) Present bias and underinvestment in education? Long-run effects of childhood exposure to booms in Colombia | 0.511 | 2 | 1 | 100% |
| 10 | Majerovitz, Jeremy and Sastry, Karthik (2023) How Much Should We Trust Regional-Exposure Designs? | 0.511 | 2 | 1 | 100% |
Showing the top 10 of 31 scored citations.