This is a follow up video to my explanation of synthetic control. I focus on the math behind the method.
I use the following paper for the explanation:
Andersson, Julius J. "Carbon taxes and CO 2 emissions: Sweden as a case study." American Economic Journal: Economic Policy 11.4 (2019): 130.

If you are more curious about the method, check out:
Abadie, Alberto, Alexis Diamond, and Jens Hainmueller. "Synth: An R package for synthetic control methods in comparative case studies." Journal of Statistical Software 42.13 (2011).

Disclaimer: If you use R, always use the improveSynth function of the following package: https://cran.rproject.org/web/packag...
The algorithm of Abadie's synth package seldom converges!!!