The Regional Transfer Multiplier may actually be insignificant.
Replication attempt reveals potential flaws in previous research on the topic.
1 Overview
This document was created in order to replicate Corbi, Papaioannou, and Surico (2018) and build on its foundation. The replication has proven unsuccessful due to detected issues in the original paper’s data. Missing municipality-years in their main labor market panel is likely the main culprit behind their significant structural parameters; with the inclusion of these labor markets, results become insignificant.
Chapter 2 was the first attempt at the replication and highlights some red flags in this first attempt. In an attempt to understand what the underlying issue is, in Chapter 3 I take a deeper look at the population and FPM estimates across this replication and the original paper. Chapter 4 does the same, but for the underlying labor market statistics. As it turns out, Chapter 5 reveals the most likely culprit for the insignificant structural parameters needed to estimate the transfer multipliers: missing and unexplained observations in their data. Chapter 6 and Chapter 7 compare input and output data-sets respectively, with the later also comparing 15 versions of the output data-sets and the ensuing estimates, to determine what may be the main causes of the differences in estimations. Lastly, Chapter 8 presents different versions of the main figures and tables necessary to determine the validity, sign and significance of the structural parameters.
Please bare in mind this output was created while attempting to perform the replication and this text does not constitute a final analysis of the topic. The reason this analysis was created was to build off of the results of Corbi, Papaioannou, and Surico (2018), not try to refute them. Given that the results could not be replicated and the real-world fiscal importance of these results, however, I now do wish to pursue this line of research going into the future and any collaboration is welcomed, especially by the original authors.