Estimate the effect of receiving a cistern on private requests exploiting the random assignment to the treatment group as an instrumental variable for cistern ownership, including municipality fixed effects Interpret the results.

ECO372-Assignment 3

Questions
(a) Estimate the OLS relationship between cistern ownership and clientelist private goods requests of citizens to politicians, with and without the inclusion of municipality fixed effects (ImunID2–ImunID40). Interpret the results. [1 pt]. [Hint: use regress command; cluster standard errors at the neighborhood cluster level using “cluster(clusters)” option]

(b) Estimate the effect of random assignment to the treatment group on (a) the probability of receiving a cistern (first–stage) , as well as on (b) the probability of making private requests to political representatives during the electoral period (reduced form), including municipality fixed effects (ImunID2–ImunID40) Interpret the results. [2 pts] [Hint: use regress command; cluster standard errors at the neighborhood cluster level using “cluster(clusters)” option]

(c) Estimate the effect of receiving a cistern on private requests exploiting the random assignment to the treatment group as an instrumental variable for cistern ownership, , including municipality fixed effects (ImunID2–ImunID40) Interpret the results. How does this IV estimate relate to the estimates from question b above? [4 pts] [Hint: use ivregress command; cluster standard errors at the neighborhood cluster level using “vce(cluster clusters)” option]