Brewer, Mike
[VerfasserIn]
;
Crossley, Thomas F.
[Sonstige Person, Familie und Körperschaft];
Joyce, Robert
[Sonstige Person, Familie und Körperschaft]
Inference with Difference-in-Differences Revisited
Beschreibung:
A growing literature on inference in difference-in-differences (DiD) designs with grouped errors has been pessimistic about obtaining hypothesis tests of the correct size, particularly with few groups. We provide Monte Carlo evidence for three points: (i) it is possible to obtain tests of the correct size even with few groups, and in many settings very straightforward methods will achieve this; (ii) the main problem in DiD designs with grouped errors is instead low power to detect real effects; and (iii) feasible GLS estimation combined with robust inference can increase power considerably whilst maintaining correct test size – again, even with few groups