Souza, Pedro CL; Rasul, Imran; de Paula, Áureo; (2019) Identifying network ties from panel data: theory and an application to tax competition. The Institute for Fiscal Studies, UCL: London, UK.

Preview

Text de Paula_CW5519-Identifying-network-ties-from-panel-data.pdf Download (1MB) | Preview

Abstract

Social interactions determine many economic behaviors, but information on social ties does not exist in most publicly available and widely used datasets. We present results on the identi…cation of social networks from observational panel data that contains no information on social ties between agents. In the context of a canonical social interactions model, we provide su¢cient conditions under which the social interactions matrix, endogenous and exogenous social e¤ect parameters are all globally identi…ed. While this result is relevant across di¤erent estimation strategies, we then describe how high-dimensional estimation techniques can be used to estimate the interactions model based on the Adaptive Elastic Net GMM method. We employ the method to study tax competition across US states. We …nd the identi…ed social interactions matrix implies tax competition di¤ers markedly from the common assumption of competition between geographically neighboring states, providing further insights for the long-standing debate on the relative roles of factor mobility and yardstick competition in driving tax setting behavior across states. Most broadly, our identi…cation and application show the analysis of social interactions can be extended to economic realms where no network data exists. JEL Codes: C31, D85, H71.

Download activity - last month

Export as CSVJSONXML

Download activity - last 12 months

Export as CSVXMLJSON

Downloads by country - last 12 months

Export as JSONXMLCSV

Archive Staff Only

View Item