On the Role of Covariates in the Synthetic Control Method
This note revisits the role of time-invariant observed covariates in the Synthetic Control (SC) method. We first derive conditions under which the original result of Abadie et al (2010) regarding the bias of the SC estimator remains valid when we relax the assumption of a perfect match on observed covariates and assume only a perfect match on pre-treatment outcomes. We then show that, even when the conditions for the first result are valid, a perfect match on pre-treatment outcomes does not generally imply an approximate match for all covariates. This will only be true for those that are both relevant and whose effects (over time) are not collinear with the effects of other observed and unobserved covariates. Taken together, our results show that a perfect match on covariates should not be required for the SC method, as long as there is a perfect match on a long set of pre-treatment outcomes.
|Date of creation:||14 Aug 2017|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ferman, Bruno & Pinto, Cristine Campos de Xavier & Possebom, Vitor Augusto, 2016. "Cherry picking with synthetic controls," Textos para discussão 420, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
- Ferman, Bruno & Pinto, Cristine Campos de Xavier, 2016. "Revisiting the synthetic control estimator," Textos para discussão 421, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:80796. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.