# Inference with Few Heterogeneous Clusters

*Rustam Ibragimov* and
*Ulrich K. Müller*

Additional contact information

Rustam Ibragimov: Imperial College Business School, Imperial College London

Ulrich K. Müller: Princeton University

*The Review of Economics and Statistics*, 2016, vol. 98, issue 1, 83-96

**Abstract:**
Suppose estimating a model on each of a small number of potentially heterogeneous clusters yields approximately independent, unbiased, and Gaussian parameter estimators. We make two contributions in this setup. First, we showhowto compare a scalar parameter of interest between treatment and control units using a two-sample t-statistic, extending previous results for the one-sample t-statistic. Second, we develop a test for the appropriate level of clustering; it tests the null hypothesis that clustered standard errors from a much finer partition are correct. We illustrate the approach by revisiting empirical studies involving clustered, time series, and spatially correlated data.

**Keywords:** Dependence; clustered standard errors; two-sample t-statistic; variance heterogeneity; difference-in-difference; structural breaks (search for similar items in EconPapers)

**JEL-codes:** C12 C14 C32 (search for similar items in EconPapers)

**Date:** 2016

**References:** Add references at CitEc

**Citations:** View citations in EconPapers (47) Track citations by RSS feed

**Downloads:** (external link)

http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00545 (application/pdf)

Access to full text is restricted to subscribers.

**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:** https://EconPapers.repec.org/RePEc:tpr:restat:v:98:y:2016:i:1:p:83-96

**Ordering information:** This journal article can be ordered from

https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by *Pierre Azoulay*, *Olivier Coibion*, *Will Dobbie*, *Raymond Fisman*, *Benjamin R. Handel*, *Brian A. Jacob*, *Kareen Rozen*, *Xiaoxia Shi*, *Tavneet Suri* and *Yi Xu*

More articles in The Review of Economics and Statistics from MIT Press

Bibliographic data for series maintained by Kelly McDougall ().