The Korean Journal of Economic Studies
Understanding and Using the CEM Method - Focusing on the Effect of Public R&D Subsidies -
Sangsin Kim (Korea Development Institute)Year 2016Vol. 64No. 3
AbstractThis study introduces CEM(Coarsened Exact Matching) method andevaluate the effects of public R&D subsidies on firm’s R&D expenditure byusing CEM. Also, it provides a basis on which CEM method can be variouslyutilized in future program evaluations by presenting the advantages anddisadvantages of CEM through comparison with other matching methods suchas PSM and MDM. As one of the matching method, CEM has the followingadvantages compared to other matching methods. First, the analyst cancontrol the imbalance occurring in the matching process in advance. Second,by limiting the matched data with the common empirical support, CEM canreduce the modeling dependence without iterative matching procedures. Incomparison with other matching methods, CEM generated the smallestimbalance. However, CEM can’t use some of the observations in treatmentgroup due to non-matching results. Although CEM has the abovedisadvantage, I think that CEM should be extensively used in terms ofreducing imbalance in the matching process.