Welfare gains of the poor: an endogenous Bayesian approach with spatial random effects

Ramírez Hassan, A. and Montoya Blandón, S. (2019) Welfare gains of the poor: an endogenous Bayesian approach with spatial random effects. Econometric Reviews, 38(3), pp. 301-318. (doi: 10.1080/07474938.2016.1261062)

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Abstract

We introduce a Bayesian instrumental variable procedure with spatial random effects that handles endogeneity, and spatial dependence with unobserved heterogeneity. We find through a limited Monte Carlo experiment that our proposal works well in terms of point estimates and prediction. We apply our method to analyze the welfare effects generated by a process of electricity tariff unification on the poorest households. In particular, we deduce an Equivalent Variation measure where there is a budget constraint for a two-tiered pricing scheme, and find that 10% of the poorest municipalities attained welfare gains above 2% of their initial income.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Montoya-Blandon, Dr Santiago
Authors: Ramírez Hassan, A., and Montoya Blandón, S.
Subjects:H Social Sciences > HA Statistics
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Econometric Reviews
Publisher:Taylor & Francis
ISSN:0747-4938
ISSN (Online):1532-4168
Published Online:18 November 2016

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