Expected vs. Unexpected Treatment Effects: A Comment on Borusyak & Hull (2023)

Geert Goeyvaerts and Jakob Vanschoonbeek

No 778148, Working Papers of VIVES - Research Centre for Regional Economics from KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics

Abstract: In an influential paper, Borusyak & Hull (2023, BH) introduce a ‘recentering’ method to estimate treatment effects from random shocks when units systematically differ in shock exposure but the shock assignment process is known. This comment clarifies how the interpretation of the estimates based on recentering alters in dynamic settings with forward-looking agents, such as when firms make irreversible location or investment decisions based on anticipated infrastructure improvements.

Pages: 13
Date: 2025-12-12
Note: paper number 104
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Published in VIVES Discussion Paper

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