NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Simon Freyaldenhoven

Research Department
Federal Reserve Bank of Philadelphia
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Philadelphia, PA 19123

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Institutional Affiliation: Federal Reserve Bank of Philadelphia

NBER Working Papers and Publications

April 2018Pre-event Trends in the Panel Event-study Design
with Christian Hansen, Jesse M. Shapiro: w24565
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.

Published: Simon Freyaldenhoven & Christian Hansen & Jesse M. Shapiro, 2019. "Pre-Event Trends in the Panel Event-Study Design," American Economic Review, vol 109(9), pages 3307-3338. citation courtesy of

 
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