An empirical comparison between a regression framework and the Synthetic Control Method

The Synthetic Control Method has been used in comparative case studies in which the existence of a counterfactual unit with a high level of similarities and comparability is crucial. On the other hand, while many methods have been developed to enhance our estimation power, not many studies have explored the prediction power of the traditional regression frameworks in such comparative case studies. In this paper, we empirically compare the Synthetic Control Method with a Dynamic Panel Data Regression Framework. We compare the estimation result and the prediction power of the predicted unit driven from the Dynamic Panel Data model and the counterfactual unit from the SCM. To apply the idea, we employ the recent sanctions on Iran as a suitable case of policy intervention and a comparative case study. (c) 2021 Board of Trustees of the University of Illinois. Published by Elsevier Inc. All rights reserved.

Automated summary

The Synthetic Control Method is crucial in comparative case studies where a counterfactual unit with high similarities is needed. This paper empirically compares the SCM with a Dynamic Panel Data Regression Framework, focusing on estimation results and prediction power. Using recent sanctions on Iran as a case study, the study aims to explore the prediction power of traditional regression frameworks in comparative case studies.