Pedro CL Souza

PUBLICATIONS

Identifying Network Ties from Panel Data: Theory and an Application to Tax Competition, with Aureo de Paula and Imran Rasul (UCL)
Forthcoming at the Review of Economic Studies
Link: https://www.cemmap.ac.uk/publication/id/14514
We present results on the identification of social networks from observational panel data that contains no information on social ties between agents. In the context of a canonical social interactions model, we provide sufficient conditions under which the social interactions matrix, endogenous and exogenous social effect parameters are all globally identified. While this result is relevant across different estimation strategies, we then describe how high-dimensional estimation techniques can be used to estimate the interactions model based on the Adaptive Elastic Net GMM method. We employ the method to study tax competition across US states. We find the identified social interactions matrix implies tax competition differs markedly from the common assumption of competition between geographically neighboring states, providing further insights for the long-standing debate on the relative roles of factor mobility and yardstick competition in driving tax setting behavior across states. Most broadly, our identification and application show the analysis of social interactions can be extended to economic realms where no network data exists.

Housing Insecurity and Homelessness: Evidence from the UK, with Thiemo Fetzer and Srinjoy Sen (Warwick)
Journal of the European Economic Association, Vol. 21, Issue 2, March 2023
Link: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/444-2019_fetzer_sen_souza.pdf
Media coverage: Economist, VoxEU
Homelessness and precarious living conditions are on the rise across much of the Western world. This paper exploits quasi-exogenous variation in the affordability of rents due to a cut to rent subsidies for low income benefit in the United Kingdom in April 2011. Using individual-level panel data as mo- tivating evidence, we document that individuals exposed to the cut were significantly more likely to build up rent arrears and face evictions; further, they were more likely to endogenously attrit from the panel. Using comprehensive district-level administrative data, we show that the affordability shock caused a significant increase in: evictions; individual bankruptcies; property crimes; insecure temporary housing arrangements; statutory homelessness and actual rough sleeping with most notable rise in statutory homelessness among fam- ilies with children. We also note political effects: the cut reduces electoral registration rates, and is associated with lower turnout and higher support for Leave in the 2016 EU referendum, likely capturing a change in composition of those that engage with democratic processes. Lastly, we estimate that the fiscal savings were much lower than anticipated: for every pound saved by the central government, council spending to meet statutory obligations for home- lessness prevention increased by 53 pence, rendering the cost savings much smaller than expected.

Restricted Access: How the Internet Can Be Used to Promote Reading and Learning, with Laura Derksen and Catherine Michaud Leclerc (Toronto)
Journal of Development Economics, Vol. 155, Issue C, March 2022
Link: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/450-2019_souza.pdf
Can schools use the internet to promote reading and learning? We provided Wikipedia access to randomly-selected students in Malawian boarding secondary schools. Students used the online resource broadly and intensively, and found it trustworthy, including for information about news and safe sex. We find a 0.10σ im- pact on English exam scores, and a higher impact among low achievers (0.20σ). Students used Wikipedia to study Biology, and exam scores increased for low achievers (0.14σ). Our results show that by restricting internet access to a source of engaging and accessible reading material, it is possible to encourage independent reading and affect educational outcomes.

Does Community Policing Build Trust in Police and Reduce Crime? Evidence from Six Coordinated Field Experiments in the Global South
Science, Vol. 374, No. 6571, Nov 2021
Part of Metaketa IV initiative. 
Is it possible for societies to reduce crime without creating or exacerbating adversarial relationships between the police and citizens? Community- oriented policing is a widely celebrated reform that aims to do so, and advocates are calling for its adoption around the world. However, the evidence base is limited to a small number of countries, does not generally study the bundle of practices commonly implemented together, and is largely silent on effects on trust. We designed six field experiments with police agencies in the Global South to study locally-designed models of community policing, with coordinated measures of crime and the attitudes and behaviors of citizens and police from both surveys and administrative data. In a preregistered meta-analysis, we find that these interventions largely failed to improve citizen-police relations and do not reduce crime. In these contexts, structural reforms to police agencies may be required for incremental reforms modeled on community policing to succeed.

Security Transitions, with Thiemo Fetzer (Warwick), Oliver Vanden Eynde (PSE) and Austin Wright (Chicago)
American Economic Review, Vol. 111, Issue 7, 2021
Link: https://www.aeaweb.org/articles?id=10.1257/aer.20200412
How do foreign powers disengage from a conflict? We study the recent large- scale security transition from international troops to local forces in the context of the ongoing civil conflict in Afghanistan. We construct a new dataset that com- bines information on this transition process with declassified conflict outcomes and previously unreleased quarterly survey data. Our empirical design leverages the staggered roll-out of the transition onset, together with a novel instrumental variables approach to estimate the impact of the two-phase security transition. We find that the initial security transfer to Afghan forces is marked by a significant, sharp and timely decline in insurgent violence. This effect reverses with the ac- tual physical withdrawal of foreign troops. We argue that this pattern is consistent with a signaling model, in which the insurgents reduce violence strategically to facilitate the foreign military withdrawal. Our findings clarify the destabilizing consequences of withdrawal in one of the costliest conflicts in modern history and yield potentially actionable insights for designing future security transitions.

Estimation and Selection of Spatial Weight Matrix in a Spatial Lag Model, with Clifford Lam (LSE)
Journal of Business and Economic Statistics, Vol. 38, Issue 3, 2020
Link: https://doi.org/10.1080/07350015.2019.1569526

Spatial econometric models allow for interactions among variables through the specification of a spatial weight matrix. Practitioners often face the risk of misspecification of such a matrix. In many problems a number of potential specifications exist, such as geographic distances, or various economic quantities among variables. We propose estimating the best linear combination of these specifications, added with a potentially sparse adjustment matrix. The coefficients in the linear combination, together with the sparse adjustment matrix, are subjected to variable selection through the adaptive Least Absolute Shrinkage and Selection Operator (LASSO). As a special case, if no spatial weight matrices are specified, the sparse adjustment matrix becomes a sparse spatial weight matrix estimator of our model. Our method can therefore be seen as a unified framework for the estimation and selection of a spatial weight matrix. The rate of convergence of all proposed estimators are determined when the number of time series variables can grow faster than the number of time points for data, while Oracle properties for all penalized estimators are presented. Simulations and an application to stocks data confirms the good performance of our procedure.

A Test for Weak Stationary in the Spectral Domain, with Javier Hidalgo (LSE), 2019
Econometric Theory, Vol. 35, Issue 3, 2019
Link:  https://doi.org/10.1017/S026646661800019

We examine tests for stability of the dynamics of a time series against alternatives that cover both local-stationarity and break points. One key feature of the tests is that the asymptotic distribution are functionals of the standard Brownian Bridge sheet in [0,1]^2 and do not depend on unknown parameters. The tests have nontrivial power against local alternatives converging to the null hypothesis at a T^{−1/2} rate, where T is the sample size. We examine an easy-to-implement bootstrap analogue and confirm the finite-sample performance in Monte-Carlo experiment. Finally, we implement the methodology to assess the stability of the inflation dynamics in the United States and on a set of neuroscience tremor data.

Detection and Estimation of Block Structure in Spatial Weight Matrix, with Clifford Lam (LSE), 2016
Econometric Reviews, Vol. 35, Issue 8-10, 2016
Link: https://doi.org/10.1080/07474938.2015.1085775

In many economic applications, it is often of interest to categorize, classify or label individuals by groups based on similarity of observed behavior. We propose a method that captures group affiliation or, equivalently, estimates the block structure of a neighboring matrix embedded in a Spatial Econometric model. The main results of the LASSO estimator shows that off-diagonal block elements are estimated as zeros with high probability, property defined as “zero-block consistency”. Furthermore, we present and prove zero-block consistency for the estimated spatial weight matrix even under a thin margin of interaction between groups. The tool developed in this paper can be used as a verification of block structure by applied researchers, or as an exploration tool for estimating unknown block structures. We analyzed the US Senate voting data and correctly identified blocks based on party affiliations. Simulations also show that the method performs well.