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With or Without U? The appropriate test for a U shaped relationship

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Author Info
Lind , Jo Thori () (Dept. of Economics, University of Oslo)
Mehlum , Halvor () (Dept. of Economics, University of Oslo)

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Abstract

Non-linear relationships are common in economic theory, and such relationships are also frequently tested empirically. We argue that the usual test of non-linear relationships is flawed, and derive the appropriate test for a U shaped relationship. Our test gives the exact necessary and sufficient conditions for the test of a U shape in both finite samples and for a large class of models.

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File URL: http://www.oekonomi.uio.no/memo/memopdf/memo2107.pdf
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Publisher Info
Paper provided by Oslo University, Department of Economics in its series Memorandum with number 21/2007.

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Length: 14 pages
Date of creation: 01 Sep 2007
Date of revision:
Handle: RePEc:hhs:osloec:2007_021

Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
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Web page: http://www.oekonomi.uio.no/indexe.html
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Related research
Keywords: U shape; hypothesis test; Kuznets curve; Fieller interval;

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Find related papers by JEL classification:
C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Hypothesis Testing
C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General

References listed on IDEAS
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  1. Jean Imbs & Romain Wacziarg, 2003. "Stages of Diversification," American Economic Review, American Economic Association, vol. 93(1), pages 63-86, March. [Downloadable!]
    Other versions:
  2. Philippe Aghion & Rachel Griffith & Peter Howitt, 2006. "Vertical Integration and Competition," American Economic Review, American Economic Association, vol. 96(2), pages 97-102, May. [Downloadable!]
  3. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May. [Downloadable!] (restricted)
    Other versions:
  4. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September. [Downloadable!] (restricted)
  5. Chambers, Dustin, 2007. "Trading places: Does past growth impact inequality?," Journal of Development Economics, Elsevier, vol. 82(1), pages 257-266, January. [Downloadable!] (restricted)
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