Economics at your fingertips  

Synthetic Control Method: Inference, Sensitivity Analysis and Confidence Sets

Sergio Firpo and Vitor Possebom ()

Journal of Causal Inference, 2018, vol. 6, issue 2, 26

Abstract: We extend the inference procedure for the synthetic control method in two ways. First, we propose parametric weights for the p-value that includes the equal weights benchmark of Abadie et al. [1]. By changing the value of this parameter, we can analyze the sensitivity of the test’s result to deviations from the equal weights benchmark. Second, we modify the RMSPE statistic to test any sharp null hypothesis, including, as a specific case, the null hypothesis of no effect whatsoever analyzed by Abadie et al. [1]. Based on this last extension, we invert the test statistic to estimate confidence sets that quickly show the point-estimates’ precision, and the test’s significance and robustness. We also extend these two tools to other test statistics and to problems with multiple outcome variables or multiple treated units. Furthermore, in a Monte Carlo experiment, we find that the RMSPE statistic has good properties with respect to size, power and robustness. Finally, we illustrate the usefulness of our proposed tools by reanalyzing the economic impact of ETA’s terrorism in the Basque Country, studied first by Abadie and Gardeazabal [2] and Abadie et al. [3].

Keywords: Synthetic Control Estimator; Hypothesis Testing; Sensitivity Analysis; Confidence Sets (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (22) Track citations by RSS feed

Downloads: (external link) ... -0026.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Journal of Causal Inference from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

Page updated 2020-09-22
Handle: RePEc:bpj:causin:v:6:y:2018:i:2:p:26:n:1