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Interpreting Event-Studies from Recent Difference-in-Differences Methods

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  • Jonathan Roth

Abstract

This note discusses the interpretation of event-study plots produced by recent difference-in-differences methods. I show that even when specialized to the case of non-staggered treatment timing, the default plots produced by software for three of the most popular recent methods (de Chaisemartin and D'Haultfoeuille, 2020; Callaway and SantAnna, 2021; Borusyak, Jaravel and Spiess, 2024) do not match those of traditional two-way fixed effects (TWFE) event-studies: the new methods may show a kink or jump at the time of treatment even when the TWFE event-study shows a straight line. This difference stems from the fact that the new methods construct the pre-treatment coefficients asymmetrically from the post-treatment coefficients. As a result, visual heuristics for analyzing TWFE event-study plots should not be immediately applied to those from these methods. I conclude with practical recommendations for constructing and interpreting event-study plots when using these methods.

Suggested Citation

  • Jonathan Roth, 2024. "Interpreting Event-Studies from Recent Difference-in-Differences Methods," Papers 2401.12309, arXiv.org.
    • Handle: RePEc:arx:papers:2401.12309
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    1. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
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    3. Fang, Francis Haoyu & Vlaicu, Razvan, 2024. "Local Banking Supply and Private Firm Activity: Evidence from Branch Closures," IDB Publications (Working Papers) 13645, Inter-American Development Bank.

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