Topics
- How fixed effects work
- Individual intercepts
- First differencing
- De-meaning
- Two-way fixed effects
-
Clustered standard errors
- Reading (chapter 16): The Effect
Additional Suggested Readings (Recent TWFE Literature)
The literature on Two-Way Fixed Effects (TWFE) and staggered treatment adoption has evolved rapidly. To understand the issues with standard TWFE and modern estimators, see:
- The Problem: Goodman-Bacon, A. (2021). “Difference-in-differences with variation in treatment timing.” Journal of Econometrics.
- A Solution: Callaway, B., and Sant’Anna, P. H. (2021). “Difference-in-differences with multiple time periods.” Journal of Econometrics.
- Accessible Overview: Baker, A. C., Larcker, D. F., and Wang, C. C. (2022). “How much should we trust staggered difference-in-differences estimates?” Journal of Financial Economics.