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Synthetic Control Method

Causal inference technique constructing a weighted control group by combining multiple untreated units to create a plausible counterfactual for the treated unit.

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Synthetic Weighting

Mathematical process of assigning optimal weights to control units to minimize pre-treatment differences with the treated unit based on predetermined covariates.

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Causal Treatment Effect

Estimation of the differential impact of a policy intervention by comparing the post-treatment evolution of the treated unit to its synthetic counterfactual.

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Synthetic Counterfactual

Artificial reconstruction of the hypothetical evolution of the treated unit in the absence of intervention, based on a linear combination of control units.

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Calibration Period

Pre-intervention time window used to determine optimal weights by minimizing the gap between the treated unit and its synthetic control group.

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Donor Matrix

Structured set of candidate control units serving as the basis for constructing the weighted synthetic control based on their pre-treatment similarity.

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Optimized Loss Function

Mathematical criterion minimizing weighted distances between pre-treatment characteristics of the treated unit and the linear combination of controls.

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Optimal Weight Vector

Mathematical solution ensuring weights sum to unity and are non-negative, forming a convex interpolation of control units.

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Synthetic Placebo Test

Empirical validation applying the methodology to untreated units to evaluate the distribution of treatment effects under the null hypothesis.

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Synthetic Parallelism Assumption

Postulate that the synthetic control follows the same trajectory as the treated unit in the absence of intervention, justifying causal estimation.

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Convex Interpolation

Mathematical constraint requiring non-negative weights summing to one, ensuring the synthetic control remains within the convex hull of observed data.

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Synthetic Gap

Temporal difference between observed values of the treated unit and values predicted by its synthetic control after intervention.

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Comparison Matrix

Two-dimensional structure organizing pre-treatment similarities between treated units and synthetic control candidates for optimization.

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Fit Quality Score

Quantitative metric evaluating the accuracy of pre-treatment reconstruction of the synthetic control compared to the actual treated unit.

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Weight Stability

Sensitivity analysis examining the variation of estimated effects when optimal weights are slightly perturbed within the convex neighborhood.

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Period Aggregation

Method combining treatment effects across multiple post-intervention periods to estimate a more robust overall average causal effect.

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