Ensuring Stability, Accuracy and Meaningfulness in Synthetic Control Methods: The Regularized SHAP-Distance Method
Daniel Albalate (),
Germà Bel () and
Ferran A. Mazaira-Font ()
Additional contact information
Daniel Albalate: Department of Econometrics, Statistics and Applied Economics (Public Policy Unit). Universitat de Barcelona. John Keynes 1-11, 08034 Barcelona. Spain
Ferran A. Mazaira-Font: Department of Econometrics, Statistics and Applied Economics (Public Policy Unit). Universitat de Barcelona. John Keynes 1-11, 08034 Barcelona. Spain
No 202005, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics
The synthetic control method (SCM) has been increasingly adopted to evaluate causal effects under quasi-experimental designs. However, SCM suffers from sound weaknesses that compromise its accuracy, stability and meaningfulness. The SHAP-distance synthetic control method (SD-SCM) is proposed as solution. We evaluate the economic effect of the government formation deadlock in Spain, 2016. The deadlock did not negatively affect economic growth, as the economy grew 1.59% more without full government; standard SCM method overestimates the effect by 0.23 pp. We show that SD-SCM offers higher accuracy and stability, while ensuring the economic meaningfulness of covariates used in building the counterfactual.
Keywords: Synthetic control; SHAP; Regularization; Quasiexperiments; Causality; Government. JEL classification: C32; E65; H11. (search for similar items in EconPapers)
Pages: 39 pages
Date: 2020-04, Revised 2020-04
New Economics Papers: this item is included in nep-gen and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:202005
Access Statistics for this paper
More papers in IREA Working Papers from University of Barcelona, Research Institute of Applied Economics Contact information at EDIRC.
Bibliographic data for series maintained by Alicia García ().