Tree-based Synthetic Control Methods: Consequences of moving the US Embassy

Nicolaj N. Mühlbach ()
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Nicolaj N. Mühlbach: Aarhus University and CREATES, Postal: Department of Economics and Business Economics, Fuglesangs Allé 4, 8210 Aarhus V, Denmark

CREATES Research Papers from Department of Economics and Business Economics, Aarhus University

Abstract: We recast the synthetic controls for evaluating policies as a counterfactual prediction problem and replace its linear regression with a nonparametric model inspired by machine learning. The proposed method enables us to achieve more accurate counterfactual predictions. We apply our method to a highly-debated policy: the move of the US embassy to Jerusalem. In Israel and Palestine, we find that the average number of weekly conflicts has increased by roughly 103% over 48 weeks since the move was announced on December 6, 2017. Using conformal inference and placebo tests, we justify our model and find the increase to be statistically significant.

Keywords: Treatment effects; Program evaluation; Synthetic control; Machine learning; US embassy move (search for similar items in EconPapers)
JEL-codes: C14 C21 C54 D02 D74 F51 (search for similar items in EconPapers)
Pages: 54
Date: 2020-05-19
New Economics Papers: this item is included in nep-big and nep-ore
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