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Tree-based Synthetic Control Methods: Consequences of moving the US Embassy

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  • Nicolaj N. Mühlbach

    (Aarhus University and CREATES)

Abstract

We recast the synthetic controls for evaluating policies as a counterfactual prediction problem and replace its linear regression with a nonparametric model inspired by machine learning. The proposed method enables us to achieve more accurate counterfactual predictions. We apply our method to a highly-debated policy: the move of the US embassy to Jerusalem. In Israel and Palestine, we find that the average number of weekly conflicts has increased by roughly 103% over 48 weeks since the move was announced on December 6, 2017. Using conformal inference and placebo tests, we justify our model and find the increase to be statistically significant.

Suggested Citation

  • Nicolaj N. Mühlbach, 2020. "Tree-based Synthetic Control Methods: Consequences of moving the US Embassy," CREATES Research Papers 2020-04, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:create:2020-04
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    References listed on IDEAS

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    More about this item

    Keywords

    Treatment effects; Program evaluation; Synthetic control; Machine learning; US embassy move;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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