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Spatial Synthetic Difference-in-Differences

Author

Listed:
  • Renan Serenini

    (University of Rome)

  • Frantisek Masek

    (National Bank of Slovakia)

Abstract

We propose a spatial extension of the Synthetic Difference-in-Differences (Sy- DiD) estimator developed by Arkhangelsky et al. (2021). Our estimator addresses violations of the StableUnit TreatmentValue Assumption (SUTVA) that arisewhen treatment effects spill over to other units. Spillovers to units in the donor pool can lead to biased and inconsistent estimates of the Average Treatment Effect on the Treated (ATT), while spillovers outside the donor pool leave the ATT identi- fiable but prevent identification of the Average Treatment Effect (ATE). Building on the framework of the Spatial Difference-in-Differences estimator introduced by Delgado and Florax (2015), we develop a method that decomposes the ATE into direct (ATT) and indirect treatment effects. We demonstrate that our esti- mator improves the identification of the indirect effect relative to the standard Spatial Difference-in-Differences approach, while retaining the robustness and favorable properties of the Synthetic Difference-in-Differences method for esti- mating the direct effect.

Suggested Citation

  • Renan Serenini & Frantisek Masek, 2025. "Spatial Synthetic Difference-in-Differences," Working and Discussion Papers WP 11/2025, Research Department, National Bank of Slovakia.
    • Handle: RePEc:svk:wpaper:1126
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    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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