Fast and reliable computation of generalized synthetic controls

The IMF and precautionary lending: An empirical evaluation of the selectivity and effectiveness of the Flexible Credit Line

“…In practice this is not always the case, however (see alsoBillmeier and Nannicini, 2013, p. 991, Tables 8-9), because of the relatively challenging optimisation problem the synthetic control methodology postulates (which involves the optimisation of both country and variable weights; see Section 4.2.1). According to preliminary work byBecker and Klößner (2017), the optimising algorithms designed by Alberto Abadie and his collaborators cannot guarantee finding the true global optimum. Here the synthetic control results for Colombia's full donor pool thus represent a local optimum.…”

What has New Zealand gained from The FTA with China?: Two counterfactual analyses†

“…Abadie and L'Hour (2018) address the problem of multiplicity of solutions, which is finding a synthetic control that best reproduces the characteristics of a treated unit may not have a unique solution. A recent research agenda focuses on (robust) generalization of the SCM (see, for example, Xu, 2017;Amjad et al, 2018;Becker and Klößner, 2018).…”

The Economic Legacy of General Velasco: Long-Term Consequences of Interventionism

“…In assessing the long-term effects of the military junta's reforms, the main problem is to define a counterfactual. The synthetic control method, introduced in Abadie and Gardeazabal (2003) and extended in Abadie et al (2010) and Becker and Klößner (2018a), provides a way around this difficulty. Under this approach, a synthetic control is obtained by means of weighted combination of J potential control countries.…”

“…We use the set of predictors in Table 2 to estimate weights to approximate mean performance in the period 1960-1969, and use those weights to construct the synthetic controls. We calculate two types of weights; ADH weights are based on the standard procedure documented in Abadie et al (2010) while the efficient BK weights are based on Becker and Klößner (2018a). Both methods are run in the R packages provided respectively by Abadie et al (2011) and Becker and Klößner (2018b).…”

“…The synthetic control method was introduced in Abadie and Gardeazabal (2003) in the context of a study on the economic cost of conflict, and it was extended in Abadie et al (2010) and Becker and Klößner (2018a). It has been used to study, among others, the effects of economic liberalization (Billmeier and Nannicini, 2013), the economic effects of natural disasters (Cavallo et al, 2013) and, closer to this paper, the economic consequences of Hugo Chavez regime (Grier and Maynard, 2016).…”