Seminar in Macroeconomics II



The Synthetic Control Method in Macroeconomics


Has the European Monetary Union (EMU) positively affected the economies of its member countries? What are the effects on wages and employment of sudden refugee waves? How did Brexit impact firms' behavior?
    Ideally, randomized controlled experiments are the gold standard that researchers would turn to for answering these questions. However, for the evaluation of such macroeconomic events and policies, randomized controlled experiments are close to impossible to implement -- for ethical, political, financial, or other reasons. Therefore, empirical work in macroeconomics about policy questions relies on observational data. Drawing inferences about the causal effect of a policy from observational data is extremely challenging and often relies on the possibility of generating a credible counterfactual. In this seminar, we will focus on the Synthetic Control Method (SCM), one of the most important innovations in the policy evaluation literature in the last 15 years. Through this seminar, you will learn the workings of the SCM while diving into several applied economic studies. In addition to the initially mentioned topics, we will address the following questions:

  • Do reforms that extend the scope of international markets foster economic growth? 
  • Does Donald Trump deserve credit for U.S. economic growth pre-pandemic?
  • What are the economic consequences of European integration?
  • What are the employment effects of increases in the minimum wage?
  • How do progressivity-reducing tax reforms impact income inequality?
  • What would have happened if countries that did not implement lockdowns at the beginning of the pandemic acted more swiftly?
  • What are the costs of economic nationalism?
  • Are countries receiving debt relief plagued by stigma on financial markets?



Your tasks consist of (i) presenting a paper on one of the topics and (ii) writing a seminar paper connecting to further articles in the scientific literature while displaying your critical thinking.
    The kick-off meeting will take place online (details will be provided in due course) on Monday, November 7, from 14:00 to 15:30. The allocation of the topics will be according to your stated preferences and announced during the kick-off meeting. Presentations will take place online across two days in January -- most likely on January 9 and January 16.
    The language of this seminar is English, which applies to presentations, discussions, and seminar papers.
    Prerequisites: Basic statistics, Intro to Microeconomics and Macroeconomics.



  • T1: Economic Liberalization

        Billmeier Andreas, and Tommaso Nannicini. (2013). "Assessing economic liberalization episodes: a synthetic control approach." The Review of Economics and Statistics 95, Pages 983-1001.

  • T2: Economic Nationalism      

        Benjamin Born, Gernot J Müller, Moritz Schularick, and Petr Sedláček. (2019). "The Costs of Economic Nationalism: Evidence from the Brexit Experiment.'' The Economic Journal, Volume 129, Issue 623, Pages 2722-2744.

  • T3: Brexit and Firms' Behavior

        Holger Breinlich, Elsa Leromain, Dennis Novy, and Thomas Sampson. (2020). "Voting with their money: Brexit and outward investment by UK firms." European Economic Review, Volume 124.

  • T4: The Trump Effect

        Benjamin Born, Gernot J Müller, Moritz Schularick, and Petr Sedláček. (2021). "The macroeconomic impact of Trump." Policy Studies, 42:5-6, Pages 580-591.

  • T5: European Integration

        Nauro F. Campos, Fabrizio Coricelli, and Luigi Moretti. (2019). "Institutional integration and economic growth in Europe." Journal of Monetary Economics, Volume 103, Pages 88-104.

  • T6: The EMU and Economic Growth

        Laura Puzzello, and Pedro Gomis-Porqueras. (2018). "Winners and losers from the Euro." European Economic Review, Volume 108, Pages 129-152.

  • T7: The EMU and Current Account Balances

        David Hope. (2016). "Estimating the effect of the EMU on current account balances: A synthetic control approach." European Journal of Political Economy, Volume 44, Pages 20-40.

  • T8: Minimum Wage

        Jardim, Ekaterina, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor, and Hilary Wething. (2022). "Minimum-Wage Increases and Low-Wage Employment: Evidence from Seattle." American Economic Journal: Economic Policy, 14 (2): 263-314. 

  • T9: Tax Progressivity and Income Inequality

        Rubolino Enrico, and Waldenström Daniel. (2020). "Tax progressivity and top incomes evidence from tax reforms." Journal of Economic Inequality, 18:261-289.

  • T10: Refugee Waves and the Labor Market

        Giovanni Peri, and Vasil Yasenov. (2017). "The Labor Market Effects of a Refugee Wave: Synthetic Control Method Meets the Mariel Boatlift." NBER Working Paper Series, No. 21801.

  • T11: Lockdowns and the Impact of Covid-19

        Latour Chiara, Peracchi Franco, and Spagnolo Giancarlo. (2022). "Assessing alternative indicators for Covid-19 policy evaluation, with a counterfactual for Sweden." PLoS ONE, 17(3): e0264769.

  • T12: Debt Relief and Financial Markets

         Valentin Lang, David Mihalyi, and Andrea F. Presbitero. (2022). "Borrowing Costs after Sovereign Debt Relief." American Economic Journal: Economic Policy (Forthcoming)