Download This PaperTree-based synthetic control methods: Consequences of relocating the US embassy
49 Pages Posted: 27 Jan 2019 Last revised: 18 Feb 2021
Date Written: February 2, 2021
Abstract
We recast the synthetic controls for evaluating policies as a counterfactual prediction problem and replace its linear regression with a nonparametric model inspired by machine learning. The proposed method enables us to achieve accurate counterfactual predictions and we provide theoretical guarantees. We apply our method to a highly debated policy: the relocation of the US embassy to Jerusalem. In Israel and Palestine, we find that the average number of weekly conflicts has increased by roughly 103% over 48 weeks since the relocation was announced on December 6, 2017. By using conformal inference and placebo tests, we justify our model and find the increase to be statistically significant.
Keywords: Treatment effects; Program evaluation; Synthetic control; Machine learning; US embassy relocation
JEL Classification: C14; C21; C54; D02; D74; F51
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