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Same Root Different Leaves: Time Series and Cross-Sectional Methods in Panel Data

Dennis Shen, Peng Ding, Jasjeet Sekhon, Bin Yu

arXiv 29 Jul 2022 · Econometrics · publishedEconometrica (2023) · 10 citations (OpenAlex)

arXiv:2207.14481 · PDF · DOI · OpenAlex · Extracted main text

Abstract

A central goal in social science is to evaluate the causal effect of a policy. One dominant approach is through panel data analysis in which the behaviors of multiple units are observed over time. The information across time and space motivates two general approaches: (i) horizontal regression (i.e., unconfoundedness), which exploits time series patterns, and (ii) vertical regression (e.g., synthetic controls), which exploits cross-sectional patterns. Conventional wisdom states that the two approaches are fundamentally different. We establish this position to be partly false for estimation but generally true for inference. In particular, we prove that both approaches yield identical point estimates under several standard settings. For the same point estimate, however, each approach quantifies uncertainty with respect to a distinct estimand. In turn, the confidence interval developed for one estimand may have incorrect coverage for another. This emphasizes that the source of randomness that researchers assume has direct implications for the accuracy of inference.

Citation extraction

39
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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
1Abadie, Alberto, Alexis Diamond, and Jens Hainmueller (2015) Comparative Politics and the Synthetic Control Method1.00054100%
2Athey, Susan, Mohsen Bayati, Nikolay Doudchenko, Guido Imbens, and K… (2021) Matrix Completion Methods for Causal Panel Data Models0.87472100%
3Agarwal, Anish, Devavrat Shah, and Dennis Shen (2021) Synthetic Interventions self0.87452100%
4Abadie, Alberto, Alexis Diamond, and Jens Hainmueller (2010) Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of Californiaâs Tobacco Control Program0.84333100%
5Abadie, A. and J. Gardeazabal (2003) The Economic Costs of Conflict: A Case Study of the Basque Country0.81142100%
6Li, Kathleen T (2020) Statistical Inference for Average Treatment Effects Estimated by Synthetic Control Methods0.73732100%
7Li, Kathleen T. and David R. Bell (2017) Estimation of average treatment effects with panel data: Asymptotic theory and implementation0.73732100%
8Chernozhukov, Victor, Kaspar Wüthrich, and Yinchu Zhu (2021) An Exact and Robust Conformal Inference Method for Counterfactual and Synthetic Controls0.73732100%
9Bottmer, Lea, Guido Imbens, Jann Spiess, and Merrill Warnick (2021) A Design-Based Perspective on Synthetic Control Methods0.69361100%
10Ben-Michael, Eli, Avi Feller, and Jesse Rothstein (2021) The Augmented Synthetic Control Method0.64441100%

Showing the top 10 of 39 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
1Double and Single Descent in Causal Inference with an Application to High-Dimensional Synthetic Control0.64422
2A Synthetic Business Cycle Approach to Counterfactual Analysis with Nonstationary Macroeconomic Data0.64422
3Difference-in-Differences Meets Synthetic Control: Doubly Robust Identification and Estimation0.51121
4Distributionally Robust Synthetic Control: Ensuring Robustness Against Highly Correlated Controls and Weight Shifts0.51122
5Incentive-Aware Synthetic Control: Accurate Counterfactual Estimation via Incentivized Exploration0.40511
6Inference for Synthetic Controls via Refined Placebo Tests0.40511
7Causal Forecasting in Panel Data: A Two-Way Synthetic Forecasting Approach0.40511