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Andreas Hagemann
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Publisher: Journals Gateway
The Review of Economics and Statistics 1–24.
Published: 15 March 2023
Abstract
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I introduce a simple permutation procedure to test conventional (non-sharp) hypotheses about the effect of a binary treatment in the presence of a finite number of large, heterogeneous clusters when the treatment effect is identified by comparisons across clusters. The procedure asymptotically controls size by applying a level-adjusted permutation test to a suitable statistic. The adjusted permutation test is easy to implement in practice and performs well at conventional levels of significance with at least four treated clusters and a similar number of control clusters. It is particularly robust to situations where some clusters are much more variable than others.
Includes: Supplementary data