Synthetic Control Estimator: A Tool for Comparative Case Studies in Economic History

27 Pages Posted: 20 Apr 2020

See all articles by David Gilchrist

David Gilchrist

The University of Western Australia - UWA Business School

Thomas Emery

The University of Western Australia - UWA Business School

Nuno Garoupa

George Mason University - Antonin Scalia Law School

Rok Spruk

University of Ljubljana, School of Economics and Business; University of Ljubljana, School of Economics and Business

Date Written: March 26, 2020

Abstract

The Synthetic Control Method has become a widely used tool in estimating the causal impact of policies, shocks and interventions of interest on economic and social outcomes. The technique has become particularly popular in estimating the effect of these shocks on a single treated unit. As a transparent and data-driven statistical technique, the goal of the Synthetic Control Method is to construct an artificial control group for the treated unit that has similar pre-treatment characteristics but has not undergone the treatment itself. The synthetic control technique works well when the control group balances pre-intervention outcomes and auxiliary covariates as much as possible. In spite of its widespread adoption, the use of the Synthetic Control Method in comparative economic history has lagged behind other areas of economics. In this article, we critically review the properties of the Synthetic Control Method and discuss the necessary conditions for a plausible application of the technique to comparative economic history in support of research designed to answer some of the long-running historical questions.

Keywords: economic history, comparative economics, Synthetic Control Method

JEL Classification: C12, C21, C33, N00, O43

Suggested Citation

Gilchrist, David and Emery, Thomas and Garoupa, Nuno and Spruk, Rok and Spruk, Rok, Synthetic Control Estimator: A Tool for Comparative Case Studies in Economic History (March 26, 2020). Available at SSRN: https://ssrn.com/abstract=3560757 or http://dx.doi.org/10.2139/ssrn.3560757

David Gilchrist (Contact Author)

The University of Western Australia - UWA Business School ( email )

Crawley, Western Australia 6009
Australia

Thomas Emery

The University of Western Australia - UWA Business School ( email )

Crawley, Western Australia 6009
Australia

Nuno Garoupa

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Rok Spruk

University of Ljubljana, School of Economics and Business ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

HOME PAGE: http://sites.google.com/site/rokspruk

University of Ljubljana, School of Economics and Business ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

HOME PAGE: http://sites.google.com/site/rokspruk

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