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A Quasi Synthetic Control Method for Nonlinear Models With High-Dimensional Covariates

Author

Listed:
  • Zongwu Cai

    (Department of Economics, The University of Kansas, Lawrence, KS 66045, USA)

  • Ying Fang

    (The Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen, Fujian 361005, China and Department of Statistics & Data Science, School of Economics, Xiamen University, Xiamen, Fujian 361005, China)

  • Ming Lin

    (The Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen, Fujian 361005, China and Department of Statistics and Data Science, School of Economics, Xiamen University, Xiamen, Fujian 361005, China)

  • Zixuan Wu

    (Department of Statistics and Data Science, School of Economics, Xiamen University, Xiamen, Fujian 361005, China)

Abstract

To make the conventional synthetic control method more flexible to estimate the average treatment effect, this article proposes a quasi synthesis control method for nonlinear models under the index model framework with possible high-dimensional covariates, together with a suggestion of using the minimum average variance estimation method to estimate parameters and the LASSO type procedure to choose covariates. Also, we derive the asymptotic distribution of the proposed estimators. A properly designed Bootstrap method is proposed to obtain confidence intervals and its theoretical justification is provided. Finally, Monte Carlo simulation studies are conducted to illustrate the finite sample performance and an empirical application to re-analyze the data from the National Supported Work Demonstration is also considered to demonstrate the proposed model to be practically useful.

Suggested Citation

  • Zongwu Cai & Ying Fang & Ming Lin & Zixuan Wu, 2023. "A Quasi Synthetic Control Method for Nonlinear Models With High-Dimensional Covariates," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202305, University of Kansas, Department of Economics, revised Aug 2023.
    • Handle: RePEc:kan:wpaper:202305
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    File URL: http://www2.ku.edu/~kuwpaper/2023Papers/202305.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Average treatment effect; Bootstrap inference; Index model; Minimum average variance estimation method; Semiparametric estimation; Synthetic control method;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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