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Causal Inference in Possibly Nonlinear Factor Models

Yingjie Feng

arXiv 31 Aug 2020 · Econometrics · 10 citations (OpenAlex)

arXiv:2008.13651 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper develops a general causal inference method for treatment effects models with noisily measured confounders. The key feature is that a large set of noisy measurements are linked with the underlying latent confounders through an unknown, possibly nonlinear factor structure. The main building block is a local principal subspace approximation procedure that combines $K$-nearest neighbors matching and principal component analysis. Estimators of many causal parameters, including average treatment effects and counterfactual distributions, are constructed based on doubly-robust score functions. Large-sample properties of these estimators are established, which only require relatively mild conditions on the principal subspace approximation. The results are illustrated with an empirical application studying the effect of political connections on stock returns of financial firms, and a Monte Carlo experiment. The main technical and methodological results regarding the general local principal subspace approximation method may be of independent interest.

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Acemoglu, Johnson, Kermani, Kwak, and Mitton (2016) The Value of Connections in Turbulent Times: Evidence from the United States1.00093100%
2Bai (2009) Panel Data Models with Interactive Fixed Effects0.84333100%
3Bai (2003) Inferential Theory for Factor Models of Large Dimensions0.73732100%
4Abadie and Imbens (2006) Large Sample Properties of Matching Estimators for Average Treatment Effects0.64422100%
5Abadie (2021) Using synthetic controls: Feasibility, data requirements, and methodological aspects0.64422100%
6Ahn and Horenstein (2013) Eigenvalue Ratio Test for the Number of Factors0.64422100%
7Bai and Ng (2002) Determining the Number of Factors in Approximate Factor Models0.64422100%
8Bonhomme, Lamadon, and Manresa (2021) Discretizing Unobserved Heterogeneity0.64422100%
9Hu and Schennach (2008) Instrumental Variable Treatment of Nonclassical Measurement Error Models0.64422100%
10Wang and Fan (2017) Asymptotics of Empirical Eigenstructure for High Dimensional Spiked Covariance0.64422100%

Showing the top 10 of 53 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Inferring Treatment Effects in Large Panels by Uncovering Latent Similarities0.874202
2Optimal Estimation of Large-Dimensional Nonlinear Factor Models0.64422
3Flexible Imputation of Incomplete Network Data0.58531
4Large Dimensional Latent Factor Modeling with Missing Observations and Applications to Causal Inference0.40511
5Prediction Intervals for Synthetic Control Methods0.40511
6Distributional Counterfactual Analysis in High-Dimensional Setup0.40511
7Inference after discretizing time-varying unobserved heterogeneity0.40511
8Identification of Average Treatment Effects in Nonparametric Panel Models0.40511