The role of group-time treatment effect heterogeneity in long standing European agricultural policies. An application to the European geographical indication policy

In recent years, the European Union is stressing the importance of monitoring and evaluating its policies, among which the common agricultural policy plays an important role. Policy evaluation, in order to provide reliable results on which to take important legislative decisions, should rely on robu...

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Main Authors: Leonardo Cei, Gianluca Stefani, Edi Defrancesco
Format: Article
Language:English
Published: Firenze University Press 2020-11-01
Series:Bio-based and Applied Economics
Subjects:
Online Access:https://oaj.fupress.net/index.php/bae/article/view/8464
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spelling doaj-1f7819c3fd15424eb4cab0d720242a8a2021-02-02T13:00:13ZengFirenze University PressBio-based and Applied Economics2280-61802280-61722020-11-019110.13128/bae-8464The role of group-time treatment effect heterogeneity in long standing European agricultural policies. An application to the European geographical indication policyLeonardo Cei0Gianluca Stefani1Edi Defrancesco2Univesity of PadovaUniversity of FlorenceUniversity of PadovaIn recent years, the European Union is stressing the importance of monitoring and evaluating its policies, among which the common agricultural policy plays an important role. Policy evaluation, in order to provide reliable results on which to take important legislative decisions, should rely on robust methodological tools. A recent strand of literature casts some doubts about the reliability of the two-way fixed effect estimator when the effect of a treatment is heterogeneous across groups of units or over time. This estimator is widely used in agricultural economics to estimate the effect of policies where effect heterogeneity may be at stake. Using the European geographical indication (GI) policy, we compared the two-way fixed effects estimator with a novel non-parametric estimator that accounts for the issues created by effect heterogeneity. The results show that the two estimators, consistently with the concerns expressed by the technical literature, may lead to different estimates of the policy effect. This suggests that treatment effect heterogeneity is likely a concern when assessing the impact of GI-type policies. Therefore, the use of the standard estimator may lead to misleading conclusions and, as a result, to inappropriate policy actions. https://oaj.fupress.net/index.php/bae/article/view/8464treatment heterogeneitygeographical indicationsimpact assessmentpolicy evaluationtwo-way fixed effects
collection DOAJ
language English
format Article
sources DOAJ
author Leonardo Cei
Gianluca Stefani
Edi Defrancesco
spellingShingle Leonardo Cei
Gianluca Stefani
Edi Defrancesco
The role of group-time treatment effect heterogeneity in long standing European agricultural policies. An application to the European geographical indication policy
Bio-based and Applied Economics
treatment heterogeneity
geographical indications
impact assessment
policy evaluation
two-way fixed effects
author_facet Leonardo Cei
Gianluca Stefani
Edi Defrancesco
author_sort Leonardo Cei
title The role of group-time treatment effect heterogeneity in long standing European agricultural policies. An application to the European geographical indication policy
title_short The role of group-time treatment effect heterogeneity in long standing European agricultural policies. An application to the European geographical indication policy
title_full The role of group-time treatment effect heterogeneity in long standing European agricultural policies. An application to the European geographical indication policy
title_fullStr The role of group-time treatment effect heterogeneity in long standing European agricultural policies. An application to the European geographical indication policy
title_full_unstemmed The role of group-time treatment effect heterogeneity in long standing European agricultural policies. An application to the European geographical indication policy
title_sort role of group-time treatment effect heterogeneity in long standing european agricultural policies. an application to the european geographical indication policy
publisher Firenze University Press
series Bio-based and Applied Economics
issn 2280-6180
2280-6172
publishDate 2020-11-01
description In recent years, the European Union is stressing the importance of monitoring and evaluating its policies, among which the common agricultural policy plays an important role. Policy evaluation, in order to provide reliable results on which to take important legislative decisions, should rely on robust methodological tools. A recent strand of literature casts some doubts about the reliability of the two-way fixed effect estimator when the effect of a treatment is heterogeneous across groups of units or over time. This estimator is widely used in agricultural economics to estimate the effect of policies where effect heterogeneity may be at stake. Using the European geographical indication (GI) policy, we compared the two-way fixed effects estimator with a novel non-parametric estimator that accounts for the issues created by effect heterogeneity. The results show that the two estimators, consistently with the concerns expressed by the technical literature, may lead to different estimates of the policy effect. This suggests that treatment effect heterogeneity is likely a concern when assessing the impact of GI-type policies. Therefore, the use of the standard estimator may lead to misleading conclusions and, as a result, to inappropriate policy actions.
topic treatment heterogeneity
geographical indications
impact assessment
policy evaluation
two-way fixed effects
url https://oaj.fupress.net/index.php/bae/article/view/8464
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