Difference-in-Differences

Vikram Dayal () and Anand Murugesan ()
Additional contact information
Vikram Dayal: Institute of Economic Growth
Anand Murugesan: Central European University

Chapter Chapter 11 in Demystifying Causal Inference, 2023, pp 227-253 from Springer

Abstract: Abstract In the Spring of 2023, the swift collapse of Silicon Valley Bank, the second-largest bank failure in the United States, sparked concerns of a global banking crisis. As the ripple effects of the risk spread across the world, banking stocks plummeted, instilling fears in the financial system. Haunted by the aftermath of the 2008 financial crisis, where about 500 banks collapsed, President Biden reassured American investors and depositors within hours of the Silicon Valley Bank failure, stating, “Let me repeat that: No losses will be borne by the taxpayers” (NYT, 14th March). The bailouts under President Bush and Obama may have softened the global Great Recession in 2008, but they also ignited a widespread backlash, such as Occupy Wall Street movement in the United States, which arguably fueled populist politics. President Biden’s prompt response likely drew upon lessons learned from the 2008 crisis and the Great Depression of the 1930s, which tested policymakers’ ability to manage banking panics. Regardless of the structural similarities or differences in the origins of the crisis, the policy response aimed to stem financial collapse and restore depositor confidence. The groundwork had already been laid in the 1930s for enthusiasts of causal inference to examine whether the Bagehot rule, advocating swift liquidity support and confidence building measures, or a policy of nonintervention would effectively stabilize banks and restore trust among depositors and investors.

Keywords: Difference-in-differences; Invariance assumptions; Counterfactual; Parallel trend; Right-to-carry gun laws; Extreme bounds; German reunification; Synthetic control method (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:sprchp:978-981-99-3905-3_11

Ordering information: This item can be ordered from
http://www.springer.com/9789819939053

DOI: 10.1007/978-981-99-3905-3_11

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().