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We consider the problem of inference in Difference-in-Differences (DID) whenthere are few treated units and errors are spatially correlated. We first showthat, when there is a single treated unit, some existing inference methodsdesigned for settings with few treated and many control units remainasymptotically valid when errors are weakly dependent. However, these methodsmay be invalid with more than one treated unit. We propose alternatives thatare asymptotically valid in this setting, even when the relevant distancemetric across units is unavailable.

Inference in Difference-in-Differences with Few Treated Units and Spatial Correlation