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Policy Evaluation with Nonlinear Trended Outcomes: Covid‐19 Vaccination Rates in the United States

Author

Listed:
  • Lynn Bergeland Morgan
  • Peter C. B. Phillips
  • Donggyu Sul

Abstract

This paper discusses pitfalls in two way fixed effects (TWFE) regressions when the outcome variables contain nonlinear and possibly stochastic trend components. If a policy change shifts trend paths of outcome variables, TWFE estimation can distort results and invalidate inference, especially in a context of evolving policy decisions. A robust solution is proposed by allowing for dynamic club membership empirically using a relative convergence test procedure. The determinants of respective club memberships are assessed by panel ordered logit regressions. The approach allows for policy evolution and shifts in outcomes according to a convergence cluster framework with transitions over time and the possibility of eventual convergence to a single cluster as policy impacts mature. The long run impact of a policy can thus be examined via its impact on convergence club membership. An application to new weekly US Covid‐19 vaccination policy data reveals that federal level vaccine mandates produced a merger of state vaccination rates into a single convergence cluster by mid‐September 2021.

Suggested Citation

  • Lynn Bergeland Morgan & Peter C. B. Phillips & Donggyu Sul, 2025. "Policy Evaluation with Nonlinear Trended Outcomes: Covid‐19 Vaccination Rates in the United States," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 40(6), pages 697-714, September.
    • Handle: RePEc:wly:japmet:v:40:y:2025:i:6:p:697-714
    DOI: 10.1002/jae.3137
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    References listed on IDEAS

    as
    1. Eva Biswas & Farzad Sabzikar & Peter C. B. Phillips, 2024. "Boosting the HP filter for trending time series with long-range dependence," Econometric Reviews, Taylor & Francis Journals, vol. 44(1), pages 41-79, August.
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    3. Peter C. B. Phillips & Donggyu Sul, 2009. "Economic transition and growth," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1153-1185.
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    5. Harsha Thirumurthy & Katherine L Milkman & Kevin G Volpp & Alison M Buttenheim & Devin G Pope, 2022. "Association between statewide financial incentive programs and COVID-19 vaccination rates," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-7, March.
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    8. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    9. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
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