Hello,

I am working on the following Diff in diff model:


ln_sales = b0 + b1*treatment + b2*(treatment*after) + d1*week1 + d2*week2 + d3*week3 +... +dN*week160

This is a DID where I'm looking at the effect on sales for four different grocery store when a dollar store opens nearby. I have the sales for four other grocery stores as a control group. The sales are average weekly sales over a time span of three years.

I have a few questions regarding this model.

I've come to understand that one of the biggest problems in DID models is autocorrelation. For instance, I can imagine that the model's errors will correlate every easter, christmas etc, as sales fluctuate differently in these time periods. However, won't the weekly dummies adjust for this? Or are there other factors I should think of?

Another question: The parallel trend assumption. This far, I have plotted the sales for the different grocery stores and treatment group to see if the assumption about parallel trends hold in the pre-treatment period. The assumption seems to hold, but I find it very hard to asses! The slope might just be a bit more steep for the treatment groups than the control groups. Are there any way to assess this in stata quantitatively?

Hope someone can help!