13.8 Suppose that you have the same data as in Exercise 13.7 (panel data with two periods,...

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13.8 Suppose that you have the same data as in Exercise 13.7 (panel data with two periods, n observations), but ignore the W regressor. Consider the alternative regression model Yit = b0 + b1Xit + b2Gi + b3Dt + uit, where Gi = 1 if the individual is in the treatment group and Gi = 0 if the individual is in the control group. Show that the OLS estimator of b1 is the differences-in-differences estimator in Equation (13.4). (Hint: See Section 8.3.)

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Introduction To Econometrics

ISBN: 9781292071367

3rd Global Edition

Authors: James Stock, Mark Watson

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