A t-test for synthetic controls [article]

Victor Chernozhukov, Kaspar Wuthrich, Yinchu Zhu
2022 arXiv   pre-print
We propose a practical and robust method for making inferences on average treatment effects estimated by synthetic controls. We develop a K-fold cross-fitting procedure for bias-correction. To avoid the difficult estimation of the long-run variance, inference is based on a self-normalized t-statistic, which has an asymptotically pivotal t-distribution. Our t-test is easy to implement, provably robust against misspecification, valid with non-stationary data, and demonstrates an excellent small
more » ... mple performance. Compared to difference-in-differences, our method often yields more than 50 parallel trends assumptions. An -package for implementing our methods is available.
arXiv:1812.10820v7 fatcat:hjt3qhgqjvadhhxynihacldlpq