# Pretest with Caution: Event-Study Estimates after Testing for Parallel Trends

“Pretest with Caution: Event-Study Estimates after Testing for Parallel Trends” (2022), by Jonathan Roth. Mathematics research paper. Original abstract below, unchanged. No free PDF was found.

- Authors: Jonathan Roth
- Published: August 31, 2022
- Field: Mathematics
- DOI: https://doi.org/10.1257/aeri.20210236
- Source: https://doi.org/10.1257/aeri.20210236

## Abstract

This paper discusses two important limitations of the common practice of testing for preexisting differences in trends (“ pre-trends”) when using difference-in-differences and related methods. First, conventional pre-trends tests may have low power. Second, conditioning the analysis on the result of a pretest can distort estimation and inference, potentially exacerbating the bias of point estimates and under-coverage of confidence intervals. I analyze these issues both in theory and in simulations calibrated to a survey of recent papers in leading economics journals, which suggest that these limitations are important in practice. I conclude with practical recommendations for mitigating these issues. (JEL A14, C23, C51)

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