Is Post-Matching DiD an Appropriate Method in Empirical Studies? The Research Design Matters
14 Pages Posted: 18 Jun 2020 Last revised: 24 Jun 2020
Date Written: May 25, 2020
This study clarifies the model that should be applied when investigating the impact of an event on outcome variable for a perfectly-matched sample. Empirically, DiD regression is a widely used approach in analyzing exogenous shocks with imperfectly matched or unmatched sample. Results from the coefficient and graphic analyses show that only dummies that indicate the post-treatment effect shall be considered if exact matching in individual characteristics is conducted beforehand. The results can provide clear guidance for social science studies such as finance and economics.
Keywords: Matching Method, Difference-in-Difference (DiD), Endogeneity, Parallel Trend Assumption
JEL Classification: C81, C50, G15, G30
Suggested Citation: Suggested Citation