An Empirical Comparison Between the Synthetic Control Method and HSIAO et al. 's Panel Data Approach to Program Evaluation

We compare two program evaluation methodologies: the synthetic control method and the panel data approach. We apply both methods to estimate the effect of the political and economic integration of Hong Kong. The results obtained differ depending on the methodology used. We then conduct a simulation...

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Bibliographic Details
Published in:Journal of applied econometrics (Chichester, England) England), 2017-08, Vol.32 (5), p.983-1002
Main Authors: Gardeazabal, Javier, Vega‐Bayo, Ainhoa
Format: Article
Language:English
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Summary:We compare two program evaluation methodologies: the synthetic control method and the panel data approach. We apply both methods to estimate the effect of the political and economic integration of Hong Kong. The results obtained differ depending on the methodology used. We then conduct a simulation that shows that the synthetic control method results in a post‐treatment mean squared error, mean absolute percentage error, and mean error with a smaller interquartile range, whenever there is a good enough match. Copyright © 2016 John Wiley & Sons, Ltd.
ISSN:0883-7252
1099-1255
DOI:10.1002/jae.2557