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10 - Dynamic Models for Policy Evaluation

Published online by Cambridge University Press:  05 January 2013

Costas Meghir
Affiliation:
University College London
Richard Blundell
Affiliation:
University College London
Whitney K. Newey
Affiliation:
Massachusetts Institute of Technology
Torsten Persson
Affiliation:
Stockholms Universitet
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Summary

Abstract

The evaluation of interventions has become a commonly used policy tool, which is frequently adopted to improve the transparency and effectiveness of public policy. However, evaluation methods based on comparing treatment and control groups in small scale trials are not capable of providing a complete picture of the likely effects of a policy and do not provide a framework that allows issues relating to the design of the program to be addressed. The longer term effects relate to decisions by individuals to change aspects of their life-cycle behavior not directly targeted by the intervention, so as to best take into account its presence. They also relate to possible changes in prices that may change or even reverse the incentives designed by the program. In this paper we show how experimental data from field trials can be used to enhance the evaluation of interventions, and we illustrate the potential importance of allowing for longer term incentive and General Equilibrium effects.

INTRODUCTION

The evaluation of interventions has become a commonly used policy tool. This has led to a better understanding of the overall benefits and costs of interventions, and of their distributional impact. It has also improved transparency in policy making and led to choices that are founded in fact rather than political prejudice.

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Advances in Economics and Econometrics
Theory and Applications, Ninth World Congress
, pp. 255 - 278
Publisher: Cambridge University Press
Print publication year: 2006

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