Forecasting Algorithms for Causal Inference with Panel Data
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Conducting causal inference with panel data is a core challenge in social science research. Advances in forecasting methods can facilitate this task by more accurately predicting the counterfactual evolution of a treated unit had treatment not occurred. In this paper, we draw on a newly developed deep neural architecture for time series forecasting (the N-BEATS algorithm). We adapt this method from conventional time series applications by incorporating leading values of control units to predict a "synthetic" untreated version of the treated unit in the post-treatment period. We refer to the estimator derived from this method as SyNBEATS, and find that it significantly outperforms traditional two-way fixed effects and synthetic control methods across a range of settings. We also find that SyNBEATS attains comparable or more accurate performance relative to more recent panel estimation methods such as matrix completion and synthetic difference in differences. Our results highlight how advances in the forecasting literature can be harnessed to improve causal inference in panel settings.
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