Optimal initial donor selection for the synthetic control method

Giovanni Cerulli

Economics Letters, 2024, vol. 244, issue C

Abstract: This paper argues that the performance of the Synthetic Control Method (SCM) can depend on the initial set of control units (donors) due to a bias–variance trade-off. A forward stepwise selection algorithm, validated via cross-validation, may reduce prediction error by suggesting to use fewer donors.

Keywords: Synthetic control method; Machine learning; Program evaluation (search for similar items in EconPapers)
JEL-codes: C01 C14 C52 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004609

DOI: 10.1016/j.econlet.2024.111976

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