Is it ok to have log transformation in difference-in-differences regression?

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How to choose ANN number of hidden layers and nodes?

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What are possible instrumental variables for business dynamics (firm entry/exit)?

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Can anyone provide the Support vector regression code structure of LIBSVM MATLAB or python ?

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How could I take into consideration the weights of observation in a system of seemingly unrelated regressions (SUR) in rstudio?

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Treating Intermediate Variable in Linear Regression Analysis in SPSS?

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Cox regression baseline hazard?

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Can we recognize signs of the "volatility clustering" property of a time series in its time domain plot?

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Ariel Linden

Can I assume you mean log transform the outcome? This is certainly an appropriate approach if your outcome is not normally distributed. When you do so, the difference-in-difference estimator (the coefficient on the interaction term [between "treatment" and period 2]) is interpreted as a net percent change in the outcome. (See chapter 13 in Jeff Wooldridge's "introductory econometrics" for details and examples).

I hope this helps

Ariel

Kisalaya Basu

Thanks Ariel. I did exactly that. I was not sure if it was right. I will check woodridge.

Alex Gilgur

Just keep in mind that the sensitivity of log is very high for values between 0 and 1 and very low above 1.