Working Paper: NBER ID: w22449
Authors: Mark Rosenzweig; Christopher Udry
Abstract: We examine the generalizability of internally valid estimates of causal effects in a fixed population over time when that population is subject to aggregate shocks. This temporal external validity is shown to depend upon the distribution of the aggregate shocks and the interaction between these shocks and the casual effects. We show that returns to investment in agriculture, small and medium enterprises and human capital differ significantly from year to year. We also show how returns to investments interact with specific aggregate shocks, and estimate the parameters of the distributions of these shocks. We show how to use these estimates to appropriately widen estimated confidence intervals to account for aggregate shocks.
Keywords: external validity; aggregate shocks; causal estimates; investment returns; temporal external validity
JEL Codes: C93; O1; O13; O14; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| aggregate shocks (E10) | returns on investments (G11) |
| weather conditions (Q54) | causal impact of deworming interventions on health outcomes (I15) |
| aggregate shocks (E10) | external validity of estimates of investment returns (G11) |
| weather realizations (Q54) | returns to planting stage investments (Q14) |
| macroeconomic shocks (F41) | realized rate of return to education (I26) |