Differencesin-differences is a common method used in panel data analysis from "summary" of Introduction to Econometrics by Christopher Dougherty
Differences-in-differences is a common method used in panel data analysis. This approach involves comparing the average change in outcomes for a treatment group before and after a policy change to the average change in outcomes for a control group over the same time period. By looking at the differences in average outcomes between the treatment and control groups before and after the policy change, researchers can estimate the causal effect of the policy. The key idea behind differences-in-differences is to control for time-invariant differences between the treatment and control groups that could confound the estimates of the policy effect. By comparing the changes in outcomes over time within each group and then taking t...
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