Sometimes we should put the lag of the response variable to a model due to auto-correlation (how to check auto-correlation can be seen here in Stata (comment #11) by using Durbin Watson test).
However, sometimes, I did not see the author put the lag variable into the Difference-in-Difference model, for example Dasgupta, 2019, that confuses me because I think adding the lag of response variable is almost a must in any research study, especially for the accounting variable that the following year data would be highly correlated to the previous year.
Many thanks and warm regards.
However, sometimes, I did not see the author put the lag variable into the Difference-in-Difference model, for example Dasgupta, 2019, that confuses me because I think adding the lag of response variable is almost a must in any research study, especially for the accounting variable that the following year data would be highly correlated to the previous year.
Many thanks and warm regards.
