# Difference-inDifference model with Discontinued Treatment

I have a situation where I observe two groups A and B for three years. Group A never received any treatment. Whereas group B received treatment in year 2 only. I can estimate the impact of the treatment by using only years 1 and 2 data with standard difference-in-difference approach. I am also interested in estimating the impact of discontinuation of treatment.

If I use year 2 and 3 data only, the treatment happens in period 2 and the treatment and control groups are not comparable. Would it be okay to use all three years of data and treat the "discontinuation of treatment" as second treatment?

Take a look at panel data and difference-in-differences application - you add fixed effects for all $$t$$ and all $$i$$, and create a DiD variable for the the interaction of the treatment and control variable. It doesn't, under ideal conditions, matter what the timing of treatment is. If you do have a reason to believe there are lagged effects you should, of course, account for that with lags/leads of treatment, which I believe the other answer is concerned about.