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Leuz,2016 documented that

an international setting that measures regulatory effects in multiple countries at different points in time is also less susceptible to concurrent but unrelated economic shocks because confounding shocks need to be correlated with the implementation dates of the regulations across these countries to induce the results

I am wondering why the "implementation in different time" can help to "less susceptible to concurrent but unrelated economic shocks". I did not fully understand what the author describes. Because it is correct that confounding shocks still the same year as the implementation year in each country.

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    $\begingroup$ If a country for example introduces competition to its electricity market, you do not know whether the economic effects seen were due to that or due to the world oil price rising or falling, or there being a general economic boom or recession at the same time. But if different countries do the same thing at different times, and you see similar effects in all of them despite different external economic shocks, then this may suggest the regulatory change had an impact. $\endgroup$
    – Henry
    Commented Jun 16, 2021 at 15:08
  • $\begingroup$ That's a great answer @Henry, it makes sense and clear, if you can post and expand a little bit further in the answer, it would benefit other learners a lot. $\endgroup$
    – Phil Nguyen
    Commented Jun 16, 2021 at 22:42

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If a country for example introduces competition to its electricity market, you do not know whether the economic effects seen were due to that or due to the world oil price rising or falling, or there being a general economic boom or recession at the same time.

But if different countries do the same thing at different times, and you see similar effects in all of them despite different external economic shocks, then this may suggest the regulatory change had an impact.

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  • $\begingroup$ SO, does it mean that, by applying this design, we can partly, avoid the confounding event explanation? $\endgroup$
    – Phil Nguyen
    Commented Jun 17, 2021 at 0:21
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    $\begingroup$ It is not a design, but an accident of history. But that is the claim $\endgroup$
    – Henry
    Commented Jun 17, 2021 at 0:49

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