Placebo test for model with fixed-effects

[Khati Zolfaghari]

Dears,

I have a question about the model specification that I wonder if people can share their thoughts about it. I estimate a model using a panel dataset including 144 countries.

𝑦𝑖,𝑡+𝑘 = 𝛼𝑖𝑘 + 𝛾𝑡𝑘 + 𝛽𝑘𝐷𝑖,𝑡 + 𝜃𝑘𝑋𝑖,𝑡 + 𝜀𝑖,𝑡+𝑘

where

where 𝑦𝑖,𝑡 is the fertility rate for country 𝑖 in year 𝑡; 𝛼𝑖 are country fixed effects, included to
take account of differences in countries’ average fertility; 𝛾𝑡 are time fixed effects, included
to take account of global shocks and global business cycle; 𝐷𝑖,𝑡 is a dummy variable
indicating a pandemic recession event in country 𝑖 at year t. 𝑋𝑖,𝑡 is a vector that includes two
lags of the dependent variable and the pandemic recession dummy

I am interested to do a placebo test, but unfortunately, as I am searching but I do not know how can I do this.


any comments about this will be appreciated!
Thanks,

[George Ford]

Create a false treatment for a year (or few years) before the true event and test it. Keep the true treatment variable in the model or exclude years after the false treatment.

[Khati Zolfaghari]

@George Ford thank you so much for your reply . the problem is that my even is not constant over the countries. in some countries for example happen in 2009-2011, some 2013, some 2016-2017 and so on .

best regards,

[George Ford]

First, you need to think about event timing. Important new developments in that area. (search csdid).

Second, it does not matter that the event dates are different. Just choose the periods before the true event.