An Alternative Approach to the Specification of Structural Transition Functions
AbstractThis paper forwards an alternative approach of characterizing the adjustment trajectory by a cumulative probability distribution function. Estimates of Wilton's (1975) automobile import equation over the period 1984-1973 are obtained in the case where a binomial CDF is used. Confirming Wilton's results, the use of transition functions to characterize coefficient adjustment between two regimes leads to substantial improvements over standard OLS estimation. Also the CDF transition estimates compare very favourably with the polynomial results, at the same time yielding more reliable coefficient transition paths and an improved framework for more precise hypothesis testing of structural change.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 10 (1977)
Issue (Month): 1 (February)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Web page: http://economics.ca/cje/
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Other versions of this item:
- Charles M. Beach, 1976. "An Alternative Approach to the Specification of Structural Transition Functions," Working Papers 230, Queen's University, Department of Economics.
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