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  • Testing for Parallel Trends when DV is binary and non-constant (non-absorbing)

    Dear STATALIST community,

    I would like to kindly ask your help. I am using the did2s command (but have also used the csdid) to run an event study. I have panel data and my unit is country and my time variable is year. My dependent variable corresponds to transitions to democracy, being always equal to zero, except when a transition to transition occurs (==1). My treatment (treat_massmov) is absorbing and corresponds to the momement from which there is a mass mobilization movement (moment in which it switches from 0 to 1).

    I have used the did2s command with no problem to establish the effect of treatment on democratization:
    Code:
    did2s transition if [aw=_webal], first_stage(i.country_id i.year controls) second_stage(treat_massmov) treatment(treat_massmov) cluster(country_id)
    However, when I use it to produce an event study, it produces strange results. I was wondering if it could be a problem that my dependent variable does not remain 1 during the time in which a country is a democracy, since I wanted to measure the effects of the treatment on a transition to democracy event. Furthermore, the fact that a country can democratize and revert to autocracy could also potentially be a problem, as the DV would switch to 1 multiple times in the same unit.

    Should I just use a dependent variable that ==0 during a country's authoritarian spell, and ==1 during its democratic spells? And should this variable be binary? Or should it be continuous (e.g. democratization index -10 to 10)?

    Thank you very much for your help.

    PS: the way in which I was coding the event study, follows the did2s authors' help file for event studies:

    Code:
    *First, I create a time trend variable:
    *The variable first_treat corresponds to the year in which a country is first treated (has its first mass mobilization movement)
    
    bysort country_id (year): gen timetrend = year - first_treat
    replace timetrend=0 if treat_group==0
    
    *Restrict it 20 years prior and after the treatment.
    gen timetrend2=timetrend
    replace timetrend2= . if timetrend>20
    replace timetrend2= . if timetrend<-20
    
    gen rel_year_shift = timetrend2 + 20
    replace rel_year_shift = 100 if rel_year_shift == .
    
    
    *Run the model:
    did2s transition if [aw=_webal], first_stage(i.country_id i.year controls) second_stage(ib100.rel_year_shift) treatment(treat_massmov) cluster(country_id)
    Last edited by Cat Santos; 07 Nov 2023, 10:52.
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