Explain how we can reconcile the heteroskedasticity of Var(yt​/... | Filo
Explain how we can reconcile the heteroskedasticity of Var(yt​/... | Filo
5.2K viewsApr 30, 2025
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How to diagnose heteroskedasticity in panel data for synthetic control models. When running causal inference on panel data with synthetic controls or difference-in-differences, you need to check if residual variance differs across geos or time periods. Step 1: Visual check - plot residuals vs predicted values (funnel shape = heteroskedasticity) Step 2: Statistical test - Breusch-Pagan test confirms heteroskedasticity exists Step 3: Decompose the structure - calculate V(exp(ν)) for geo dimension
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How to diagnose heteroskedasticity in panel data for synthetic control models. When running causal inference on panel data with synthetic controls or difference-in-differences, you need to check if residual variance differs across geos or time periods. Step 1: Visual check - plot residuals vs predicted values (funnel shape = heteroskedasticity) Step 2: Statistical test - Breusch-Pagan test confirms heteroskedasticity exists Step 3: Decompose the structure - calculate V(exp(ν)) for geo dimension
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