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The behaviour of Dickey-Fuller and Phillips-Perron tests under the alternative hypothesis

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Author Info
STEPHEN J. LEYBOURNE
PAUL NEWBOLD

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Abstract

The two most commonly applied tests of the null hypothesis of a unit autoregres-sive root in a time series generating process are examined. Simple theoretical calculations, confirmed by simulation evidence, suggest that the probabilities of rejection of the null hy-pothesis of those tests can differ substantially when the true generating process is a stationary second-order autoregression.

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Publisher Info
Article provided by Royal Economic Society in its journal The Econometrics Journal.

Volume (Year): 2 (1999)
Issue (Month): 1 ()
Pages: 92-106
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Handle: RePEc:ect:emjrnl:v:2:y:1999:i:1:p:92-106

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Related research
Keywords: Power comparisons; Unit root tests.;

Cited by:
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  1. Morten Ørregaard Nielsen, 2008. "A Powerful Test of the Autoregressive Unit Root Hypothesis Based on a Tuning Parameter Free Statistic," Working Papers 1185, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  2. Morten Ørregaard Nielsen, 2008. "A Powerful Tuning Parameter Free Test of the Autoregressive Unit Root Hypothesis," Working Papers 1175, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  3. Guro Børnes Ringlund, Knut Einar Rosendahl and Terje Skjerpen, 2004. "Does oilrig activity react to oil price changes? An empirical investigation," Discussion Papers 372, Research Department of Statistics Norway. [Downloadable!]
    Other versions:
  4. George Halkos & Ilias Kevork, 2005. "A comparison of alternative unit root tests," Journal of Applied Statistics, Taylor and Francis Journals, vol. 32(1), pages 45-60, January. [Downloadable!] (restricted)
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This page was last updated on 2009-12-24.


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