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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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    Cited by:

    1. 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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