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(Empirical) Bayes Approaches to Parallel Trends

Soonwoo Kwon, Jonathan Roth

arXiv 18 Apr 2024 · Econometrics · publishedAEA Papers and Proceedings (2024) · 1 citations (OpenAlex)

arXiv:2404.11839 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We consider Bayes and Empirical Bayes (EB) approaches for dealing with violations of parallel trends. In the Bayes approach, the researcher specifies a prior over both the pre-treatment violations of parallel trends $\delta_{pre}$ and the post-treatment violations $\delta_{post}$. The researcher then updates their posterior about the post-treatment bias $\delta_{post}$ given an estimate of the pre-trends $\delta_{pre}$. This allows them to form posterior means and credible sets for the treatment effect of interest, $\tau_{post}$. In the EB approach, the prior on the violations of parallel trends is learned from the pre-treatment observations. We illustrate these approaches in two empirical applications.

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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
1Youssef Benzarti \ Dorian Carloni (2019) Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France0.40511100%
2Raffaella Giacomini \ Toru Kitagawa (2021) Robust Bayesian Inference for Set-Identified Models0.40511100%
3Thomas Leavitt (2020) Beyond Parallel Trends: Improvements on Estimation and Inference in the Difference-in-Differences Design0.40511100%
4Michael F. Lovenheim \ Alexander Willén (2019) The Long-Run Effects of Teacher Collective Bargaining0.40511100%
5Charles F. Manski \ John V. Pepper (2018) How Do Right-to-Carry Laws Affect Crime Rates? Coping with Ambiguity Using Bounded-Variation Assumptions0.40511100%
6Anita M. McGahan \ Michael E. Porter (1999) The Persistence of Shocks to Profitability0.40511100%
7Hyungsik Roger Moon \ Frank Schorfheide (2012) Bayesian and Frequentist Inference in Partially Identified Models0.40511100%
8Ashesh Rambachan \ Jonathan Roth (2023) A More Credible Approach to Parallel Trends0.40511100%
9Jonathan Roth (2022) Pretest with Caution: Event-Study Estimates after Testing for Parallel Trends self0.40511100%
10Jonathan Roth, Pedro H. C. Sant’Anna, Alyssa Bilinski \ John Poe (2023) What’s trending in difference-in-differences? A synthesis of the recent econometrics literature self0.40511100%

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Cited by, within the corpus

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

Citing paperIntensityMentionsSections
1Semiparametric Bayesian Difference-in-Differences0.40511
22510.261060.40511