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|Synthetic controls with imperfect pretreatment fit
|Pinto, Cristine Campos de Xavier
|We analyze the properties of the Synthetic Control (SC) and related estimators when the pre-treatment fit is imperfect. In this framework, we show that these estimators are generally biased if treatment assignment is correlated with un observed confounders, even when the number of pre-treatment periods goes to infinity. Still, we show that a demeaned version of the SC method can improve in terms of bias and variance relative to the difference-in-difference estimator. We also derive a specification test for the demeaned SC estimator in this setting with imperfect pre-treatment fit. Given our theoretical results, we provide practi cal guidance for applied researchers on how to justify the use of such estimators in empirical applications.
|Keywords (english terms):
linear factor model
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|R_Artigo_2021_Synthetic controls with imperfect pretreatment fit_TC.pdf
|R_Artigo_2021_Synthetic controls with imperfect pretreatment fit_TC
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