Covariate-Balanced Weighted Stacked Difference-in-Differences

Abstract

This paper proposes Covariate-Balanced Weighted Stacked Difference-in-Differences (CBWSDID), a design-based extension of weighted stacked DID for settings in which untreated trends may be conditionally rather than unconditionally parallel. The estimator separates within-subexperiment design adjustment from across-subexperiment aggregation: matching or weighting improves treated-control comparability within each stacked subexperiment, while the corrective stacked weights of Wing et al. recover the target aggregate ATT. I show that the same logic extends from absorbing treatment to repeated $0 \to 1$ and $1 \to 0$ episodes under a finite-memory assumption. The paper develops the identifying framework, discusses inference, presents simulation evidence, and illustrates the estimator in applications based on Trounstine (2020) and Acemoglu et al. (2019). Across these examples, CBWSDID serves as a bridge between weighted stacked DID and design-based panel matching. The accompanying R package cbwsdid is available on GitHub.

Figures (6)

• Figure 1: Treatment adoption map in absorbing-treatment simulation.
• Figure 2: Event-study estimates in the absorbing-treatment simulation.
• Figure 3: Treatment adoption map in Trounstine (2020).
• Figure 4: Event-study comparison of estimators in the replication of Trounstine (2020).
• Figure 5: Treatment adoption map in Acemoglu et al. (2019).