Essays on the econometrics of program evaluation

Through two empirical studies, we explore various methods that can be used to estimate the average treatment effect of a dichotomous policy variable. The first essay uses many cross-sectional program evaluation techniques and applies them to a micro-level data set. The second essay assesses the effect of a macro-level intervention on outcome variables with the use of time-series approaches.; In the first study, we use the 2001 wave of National Drug Strategy Household Survey (NDSHS) to assess the impact of marijuana decriminalization policy on marijuana smoking prevalence in Australia. Both parametric and nonparametric methods are used. The parametric approach postulates an endogenous probit switching model and its nested binary probit, endogenous bivariate probit and two-part models. The nonparametric approach uses the propensity score stratification matching to compute alternative measures of the treatment effect. Specification analyses are also conducted. We use likelihood ratio test to choose among nested parametric models, then construct a nonparametric kernel-based test to select between a parametric null model and its nonparametric alternative. Both normal and bootstrap empirical distributions are used to approximate the null distribution of the test statistic. Our specification analyses demonstrate that the endogenous probit switching model is superior to other models, which suggests that decriminalization raises the probability of smoking marijuana by 16.3%.; The second study uses monthly data from January 1993 to June 2005 to assess the effectiveness of capital controls in restoring the Malaysian economy as compared to the IMF programs used in Indonesia, Korea, and Thailand. We analyze various aspects of the economy by employing both conventional and time-shifted difference-in-difference estimations. To evaluate the effects in the short, medium, and long runs, this study includes one to six years of treatment periods. Our estimation results from the time-shifted approach favor capital controls as a more effective crisis' solution than the IMF programs in the short and medium runs. However, when the conventional method is used, the performance of capital controls relative to the IMF programs is found to vary depending on the economic measure of interest, the treatment period considered and the set of IMF countries used for comparison.