Pre-event Trends in the Panel Event-study Design

Simon Freyaldenhoven, Christian Hansen and Jesse Shapiro

No 19-27, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: We consider a linear panel event-study design in which unobserved confounds may be related both to the outcome and to the policy variable of interest. We provide sufficient conditions to identify the causal effect of the policy by exploiting covariates related to the policy only through the confounds. Our model implies a set of moment equations that are linear in parameters. The effect of the policy can be estimated by 2SLS, and causal inference is valid even when endogeneity leads to pre-event trends (?pre-trends?) in the outcome. Alternative approaches perform poorly in our simulations

Keywords: pre-trends; event study; differences-in-differences (search for similar items in EconPapers)
JEL-codes: C23 C26 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2019-06-04
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Citations: View citations in EconPapers (118)

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Related works:
Journal Article: Pre-event Trends in the Panel Event-Study Design (2019)
Working Paper: Pre-event Trends in the Panel Event-study Design (2018)
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DOI: 10.21799/frbp.wp.2019.27

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