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A flexible Synthetic Control Method for modeling policy evaluation

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  • Cerulli, Giovanni

Abstract

We extend the Synthetic Control Method (SCM) of Abadie et al. (2010) for policy evaluation through a flexible nonparametric construction of the weights for estimating the synthetic (or counterfactual) time pattern of a treated unit. We present a comparison of both methods to assess the effects of adopting the Euro as national currency on Italian exports. Results show that both methods provide a small pre-treatment prediction error. However, when departing from the beginning of the pre-treatment period, the nonparametric SCM slightly outperforms the parametric one.

Suggested Citation

  • Cerulli, Giovanni, 2019. "A flexible Synthetic Control Method for modeling policy evaluation," Economics Letters, Elsevier, vol. 182(C), pages 40-44.
    • Handle: RePEc:eee:ecolet:v:182:y:2019:i:c:p:40-44
    DOI: 10.1016/j.econlet.2019.05.019
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    Citations

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    Cited by:

    1. Bidisha Lahiri & Anurag Deb, 2022. "Impact of the Indian “demonetization” policy on its export performance," Empirical Economics, Springer, vol. 62(6), pages 2799-2825, June.
    2. Giovanni Cerulli & Silvia Nenci & Luca Salvatici & Antonio Zinilli, 2022. "Currency Unions and Global Value Chains: The Impact of the Euro on the Italian Value Added Exports," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(2), pages 373-407, July.
    3. Hu, Yuan & Kuhn, Lena & Zheng, Wenxue, 2021. "Promote or Inhibit？the Effects of Forest Carbon Sinks Projects on Agricultural Development: Evidence from Sichuan, China," 2021 Conference, August 17-31, 2021, Virtual 315381, International Association of Agricultural Economists.
    4. Alfano, Vincenzo & Ercolano, Salvatore & Cicatiello, Lorenzo, 2021. "School openings and the COVID-19 outbreak in Italy. A provincial-level analysis using the synthetic control method," Health Policy, Elsevier, vol. 125(9), pages 1200-1207.
    5. David Gilchrist & Thomas Emery & Nuno Garoupa & Rok Spruk, 2023. "Synthetic Control Method: A tool for comparative case studies in economic history," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 409-445, April.
    6. Alessio Mitra & Athanasios Chymis, 2022. "Federalism, but how? The impact of vertical fiscal imbalance on economic growth. Evidence from Belgium," Economics and Politics, Wiley Blackwell, vol. 34(2), pages 322-350, July.
    7. Giovanni Cerulli, 2019. "Extending the difference-in-differences (DID) to settings with many treated units and same intervention time: Model and Stata implementation," 2019 Stata Conference 26, Stata Users Group.

    More about this item

    Keywords

    Synthetic control; Nonparametric estimation; Program evaluation;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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