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714. Effect of the Inflation Reduction Act on Equity Raised Values in the US Healthcare Macro-Sector: A Matrix-Completion Approach

Invited abstract in session MA-63: Applications in Finance and Economics, stream OR in Banking, Finance and Insurance: New Tools for Risk Management.

Monday, 8:30-10:00
Room: S14 (building: 101)

Authors (first author is the speaker)

1. Francesco Biancalani
AXES, IMT School for Advanced StudiesLucca
2. Giorgio Gnecco
IMT - School for Advanced Studies, Lucca
3. Andrea Signori
Università Cattolica del Sacro Cuore
4. Silvio Vismara
Università degli studi di Bergamo

Abstract

We investigate the effect of the recent Inflation Reduction Act (IRA) - introduced in August 2022 -
on equity raised in the US healthcare macro-sector. For the data analysis, we employ a panel approach, in
which a subset of entries of a matrix of new equity raised values is observed, and one aims to predict
counterfactual values for the missing entries (i.e., the equity raised values in the US healthcare macro-
sector that would have been obtained after August 2022, in the absence of the IRA). Rows of the data
matrix refer to specific pairs having the form region/macro-sector (for a total of 3 x 5=15 rows), and their
columns to specific quarters of the year (for a total of 2 x 4=8 quarters, 4 before the adoption of the policy,
and 4 after that event). Such predictions are obtained by employing a supervised machine-learning method
named matrix completion, whose use for causal panel data analysis has been recently advocated in a
celebrated work by Athey et al. in 2021. According to the results of our analysis, the effect of the IRA was to
increase equity raised values in the US healthcare macro-sector during the treatment period, as compared
to their predicted counterfactual values.

Keywords

Status: accepted

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