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

Nicolaj S{\o}ndergaard M\"uhlbach and Mikkel Slot Nielsen

Papers from arXiv.org

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 accurate counterfactual predictions and we provide theoretical guarantees. We apply our method to a highly debated policy: the relocation 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 relocation was announced on December 6, 2017. By using conformal inference and placebo tests, we justify our model and find the increase to be statistically significant.

Date: 2019-09, Revised 2021-02
New Economics Papers: this item is included in nep-big
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