Same Root Different Leaves: Time Series and Cross-Sectional Methods in Panel Data

Understand

A central goal in social science is to evaluate the causal effect of a policy.

• One dominant approach is through panel data analysis in which the behaviors of multiple units are observed over time.
• The information across time and space motivates two general approaches: (i) horizontal regression (i.e., unconfoundedness), which exploits time series patterns, and (ii) vertical regression (e.g., synthetic controls), which exploits cross-sectional patterns.
• Conventional wisdom states that the two approaches are fundamentally different.