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Synthetic Control Method for Dutch Policy Evaluation.
- Source :
-
De Economist [Economist (Leiden)] 2023; Vol. 171 (1), pp. 51-83. Date of Electronic Publication: 2023 Jan 02. - Publication Year :
- 2023
-
Abstract
- We apply the synthetic control method to a case study of the Dutch State Treasury Agency's funding policy. We study empirically what effect a change in funding strategy by the Dutch treasury had on market conditions. First, our results suggest that introducing more uncertainty to the funding policy, by means of a target range for capital market issuances, does not lead to a higher risk premium on Dutch government debt. Second, our paper shows that the synthetic control method, or the related constrained regression, is more suitable than a difference-in-differences method for this particular case study. The synthetic control method and constrained regression only include control units that are similar to the Netherlands. The difference-in-differences estimator includes all control countries, even ones that are not similar to the Netherlands. The difference-in-differences estimates incorrectly suggest that introducing more uncertainty in the funding policy leads to a higher risk premium. This shows that synthetic control and constrained regression are in some cases more suitable than a standard difference-in-differences. Furthermore, the synthetic control and constrained regression results hold when time and unit placebo tests are applied, whereas difference-in-differences results are not robust for this case study.<br />Competing Interests: Conflict of interestNo conflicts of interest.<br /> (© Springer Science+Business Media, LLC, part of Springer Nature 2022, Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.)
Details
- Language :
- English
- ISSN :
- 0013-063X
- Volume :
- 171
- Issue :
- 1
- Database :
- MEDLINE
- Journal :
- De Economist
- Publication Type :
- Academic Journal
- Accession number :
- 36620520
- Full Text :
- https://doi.org/10.1007/s10645-022-09417-5