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Moretti replication critique published in AER rebuts key agglomeration theory

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A detailed replication of Moretti (2021) published as a comment in the American Economic Review has found significant flaws in the original study's methodology. The replication, authored by a researcher, identifies ten issues within Moretti's analysis of technology cluster effects on innovation. Two major problems stand out: the original event study incorrectly models inventor movement across cities, and a coding error in the instrumental variable invalidates the causal claims. When corrected, both tests yield null results, suggesting the positive correlation between cluster size and patenting may not reflect causation. The aggregate benefits of agglomeration calculated by Moretti are also overstated due to these methodological errors.