If differential pre-trends is a concern in my TSCS data, would it be kosher to incorporate lagged changes (rather than levels) of the outcome variable in my matching formula, and then assess covariate balance on those lagged changes in the refined matched sets?
To illustrate my point, suppose we run the following lines of code on the dem dataset first:
Could we assess pre-trends in matched data based on covariate balance on diff_y thus generated? And if we were to minimize imbalance in diff_y, would it make more sense to incorporated lagged value of diff_y (rather than lagged values of y) in the matching formula?
In the dem dataset, Panelmatch's vignette gives the following example of refined matching based on lagged y (and lagged tradewb):
Hello,
If differential pre-trends is a concern in my TSCS data, would it be kosher to incorporate lagged changes (rather than levels) of the outcome variable in my matching formula, and then assess covariate balance on those lagged changes in the refined matched sets?
To illustrate my point, suppose we run the following lines of code on the
dem
dataset first:Could we assess pre-trends in matched data based on covariate balance on
diff_y
thus generated? And if we were to minimize imbalance indiff_y
, would it make more sense to incorporated lagged value ofdiff_y
(rather than lagged values ofy
) in the matching formula?In the
dem
dataset, Panelmatch's vignette gives the following example of refined matching based on laggedy
(and laggedtradewb
):If I examine covariate balance on
diff_y
fromPM.results.maha
based on the following line of code:I get the following plot:![covbal_lagy](https://user-images.githubusercontent.com/54967998/153950443-5293cf32-c348-4e0e-b6cc-6d048a709fe3.png)
However, if I replace
y
withdiff_y
in the matching formula as follows:And then run the exact same line of code to assess covariate balance on![covbal_lagdiffy](https://user-images.githubusercontent.com/54967998/153950596-79494df0-6b60-47fd-ad08-b52e66f4145e.png)
diff_y
, I would get the following plot:It seems to me that the second approach reduces imbalance in pre-trends, but please let me know whether I'm mistaken about this. Thank you!