Research Interests

  • Applied Microeconometrics
  • Policy Evaluation
  • Public Finance
  • Labor Economics and Economics of Education
  • Health Economics


  • Selected Papers

    Comparative Politics and the Synthetic Control Method Revisited: A Note on Abadie et al. (2015)

    Forthcoming in Swiss Journal of Economics and Statistics, 2017.

    Recently, Abadie et al. (2015) have expanded synthetic control methods by the so-called cross-validation technique. We find that their results are not being reproduced when alternative software packages are used or when the variables’ ordering within the dataset is changed. We show that this failure stems from the cross-validation technique relying on non-uniquely defined predictor weights. While the amount of the resulting ambiguity is negligible for the main application of Abadie et al. (2015), we find it to be substantial for several of their robustness analyses. Applying well-defined, standard synthetic control methods reveals that the authors’ results are particularly driven by a specific control country, the United States.

    You can find the paper here:

    Click to Download(SCM_CrossValidation.pdf - 377.49K)


    Outside the Box: Using Synthetic Control Methods as a Forecasting Technique

    Applied Economics Letters, 2017, downloadable here.

    We introduce synthetic control methods (SCM) as a forecasting technique. Using i) as economic predictors solely the outcome itself, i.e., lagged values of the dependent variable, and ii) lagged time series of the outcome to build the donor pool, we let SCM choose and weight appropriate values in order to come up with a sensible forecast of U.S. GDP growth. This procedure performs competitively viable compared with alternative forecasting methods.


    The Incidence of Cash for Clunkers: Evidence from the 2009 Car Scrappage Scheme in Germany

    International Tax and Public Finance, 2016, 23, 1093-1125, downloadable here.

    A first draft of this paper was made available in April 2012 with a slightly different subtitle (“An Analysis of the 2009 Car Scrappage Scheme in Germany”). The Paper is a University of Zurich Working Paper (No. 68, 2012).

    This paper investigates the German car scrappage program, focusing on the incidence of the premium. We ask how much of the € 2,500 ($ 3,500) buyer subsidy is actually captured by the demand side. More precisely, we analyze the program's impact on different car segments, allowing for heterogeneity in incidence at different points in the vehicle-price distribution. Using a unique micro transaction data set, we find that the incidence of the subsidy strongly and significantly varies across price segments. Subsidized buyers of cheap cars paid a little more than comparable buyers who did not receive the subsidy, indicating incidence amounts slightly below 100%. For more expensive vehicles, subsidized buyers were granted large extra discounts on top of the government premium, translating into incidence amounts considerably greater than 100%. Taken together, this results in an aggregate incidence amount of up to plus EUR 350 million, suggesting that the positive effect for expensive cars overcompensates the negative effect for small cars.


    Synthesizing Cash for Clunkers: Stabilizing the Car Market, Hurting the Environment

    Discussion Paper

    We examine the impact of the EUR 5 billion German Cash for Clunkers program on vehicle registrations and respective CO2 emissions. To construct proper counterfactuals, we develop the multivariate synthetic control method using time series of economic predictors (MSCMT) and show (asymptotic) unbiasedness of the corresponding effect estimator under quite general conditions. Modeling different buyer subgroups, we disentangle such MSCMT effects. 850,000 vehicles would not have been purchased in absence of the subsidy – worth EUR 17 billion. However, 580,000 purchases were simply windfall gains. These cars, together with 500,000 pull-forward sales, will lead to at least 2 million tons of additional CO2 emissions, as buyers were inadvertently incentivized to buy less eco-friendly cars.

    You can find the paper here:

    Click to Download(CfC_MSCMT.pdf - 766.30K)


    You can find the recent version of the MSCMT package (for R) here.


    Illuminating the World Cup Effect: Night Lights Evidence from South Africa

    Discussion Paper

    This paper evaluates the economic impact of the $14 billion preparatory infrastructure investments for the 2010 FIFA World Cup in South Africa. We use satellite data on night light luminosity at municipality and electoral district level as a proxy for economic development, applying synthetic control methods for estimation. For the average World Cup municipality, we find significantly positive, short-run effects before the tournament, corresponding to a reduction of unemployment by 1.3 percentage points. At the electoral district level, we reveal distinct effect heterogeneity, where especially investments in transport infrastructure are shown to have long-lasting, positive effects, particularly in more rural areas.

    You can find the paper here:

    Click to Download(WorldCup_NightLights.pdf - 1.03M)


    The most current version is here:

    Click to Download

    (WorldCup_SouthAfrica.pdf - 3.68M)


    Media Coverage: SciBraai; htxt.africa; Sunday Times - you can also find the corresponding article here:

    Click to Download

    (SundayTimes_2016_06_19.pdf - 808.02K)



    Synthetic Control Methods: Never Use All Pre-Intervention Outcomes Together With Covariates

    Discussion Paper

    It is becoming increasingly popular in applications of synthetic control methods to include the entire pre-treatment path of the outcome variable as economic predictors. We demonstrate both theoretically and empirically that using all outcome lags as separate predictors renders all other covariates irrelevant. This finding holds irrespective of how important these covariates are for accurately predicting post-treatment values of the outcome, potentially threatening the estimator's unbiasedness. We show that estimation results and corresponding policy conclusions can change considerably when the usage of outcome lags as predictors is restricted, resulting in other covariates obtaining positive weights.

    You can find the paper here:

    Click to Download(SCM_Predictors.pdf - 470.23K)


    Cross-Validating Synthetic Controls

    Discussion Paper

    While the literature on synthetic control methods mostly abstracts from out-of-sample measures, Abadie et al. (2015) have recently introduced a cross-validation approach. This technique, however, is not well-defined since it hinges on predictor weights which are not uniquely defined. We fix this issue, proposing a new, well-defined cross-validation technique, which we apply to the original Abadie et al. (2015) data. Additionally, we discuss how this new technique can be used for comparing different specifications based on out-of-sample measures, avoiding the danger of cherry-picking.

    You can find the paper here:

    Click to Download(SCM_CrossValidation_2.pdf - 118.09K)


    Goodbye Smokers' Corner: Health Effects of School Smoking Bans

    Discussion Paper

    We estimate the causal impact of school smoking bans in Germany on the extensive and intensive margin of smoking. Using representative longitudinal data, we exploit variation in state, year, age cohort, school track, grade repetition, and survey time regarding the exposure to such smoking bans to identify the effects of interest. The estimates from our multiple difference-in-differences approach show that six to ten years after the intervention, propensity towards smoking and the number of smoked cigarettes per day decreases by 14-21 and 7-25 percent, respectively. Our results still hold if we account for the clustered data structure by by evaluating the effects with randomization inference

    You can find the paper here:

    Click to Download(REP_17_678.pdf - 202.28K)


    The most current version is here:

    Click to Download

    (SchoolSmokingBan.pdf - 545.11K)


    The Importance of Tax Adjustments when Evaluating Wage Expectations

    Discussion Paper

    Using elicited expectations of future gross salaries, we evaluate characteristics causing German students to make larger or smaller estimation errors. While students seem to underestimate actual salaries by 18 percent, we show that these errors are highly attributable to misconceptions of the progressive income tax. Developing a suitable adjustment procedure, we correct students’ estimates and find that errors decline by 12 percentage points. Conducting regression analyses, we reveal strong connections with students’ age, gender, work experience, secondary school track, and knowledge about student loans. These results change notably if not controlling for students’ misconception of the tax system.

    You can find the paper here:

    Click to Download(WageExpectations_Taxes.pdf - 576.68K)


Contact Information

University of Hohenheim
Department of Economics
70593 Stuttgart
Germany

g[dot]pfeifeYgGuWs6JNOaeXTCb8hoRr[at]inuxXy250RVlMrOzbqhoh-WXE0KQgMYJajhenNgXQDrYJ3R2VjheiPbqAviuEcM16SdkGx4Q[tod]mde
0049 711 459-22193