I am trying to control for pre-treatment trends in my DiD style regression.
My baseline regression is as follows (using Stata):
reg y c.treat*post i.year treat othercontrols
Note that my treatment variable is continuous and I have other specifications where I interact it with years rather than a post indicator. Anyways, this is my idea to incorporate pre-treatment trends.
keep only pre-treatment data
1) run the same regression but add a
reg y c.treat*post i.year treat othercontrols c.year*c.treat variable
2) save the coefficient on the
c.year*c.treat as "coef"
3) Using the full sample, run
reg y c.treat*post i.year treat othercontrols c.year*c.treat variable*coef
Can anyone tell me if this approach seems right/makes any sense? If not, other ideas?