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Testing a parametric quantile-regression model with an endogenous explanatory variable against a nonparametric alternative

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Author Info
Joel Horowitz () (Institute for Fiscal Studies and Northwestern University)
Sokbae 'Simon' Lee () (Institute for Fiscal Studies and University College London)

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Abstract

This paper is concerned with inference about a function g that is identified by a conditional quantile restriction involving instrumental variables. The paper presents a test of the hypothesis that g belongs to a finite-dimensional parametric family against a nonparametric alternative. The test is not subject to the ill-posed inverse problem of nonparametric instrumental variables estimation. Under mild conditions, the test is consistent against any alternative model. In large samples, its power is arbitrarily close to 1 uniformly over a class of alternatives whose distance from the null hypothesis is O (n1/2), where n is the sample size. Monte Carlo simulations illustrate the finite-sample performance of the test.

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File URL: http://cemmap.ifs.org.uk/wps/cwp0702.pdf
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Publisher Info
Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP02/07.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 35 pp.
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:ifs:cemmap:02/07

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Related research
Keywords: Hypothesis test; quantile estimation; instrumental variables; specification;

Find related papers by JEL classification:
C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Hypothesis Testing
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods

References listed on IDEAS
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  1. Andrew Chesher, 2003. "Identification in Nonseparable Models," Econometrica, Econometric Society, vol. 71(5), pages 1405-1441, 09. [Downloadable!] (restricted)
  2. Darolles, S. & Florens, J.-P. & Renault, É., 2002. "Nonparametric Instrumental Regression," Cahiers de recherche 05-2002, Centre interuniversitaire de recherche en économie quantitative, CIREQ. [Downloadable!]
    Other versions:
  3. Sokbae 'Simon' Lee, 2004. "Endogeneity in quantile regression models: a control function approach," CeMMAP working papers CWP08/04, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
  4. Amemiya, Takeshi, 1982. "Two Stage Least Absolute Deviations Estimators," Econometrica, Econometric Society, vol. 50(3), pages 689-711, May. [Downloadable!] (restricted)
  5. Hidehiko Ichimura & Sokbae Lee, 2006. "Characterization of the Asymptotic Distribution of Semiparametric M-Estimators," CIRJE F-Series CIRJE-F-426, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
    Other versions:
  6. E. Guerre & Pascal Lavergne, 2000. "Minimax Rates for Nonparametric Specification Testing in Regression Models," Econometric Society World Congress 2000 Contributed Papers 0644, Econometric Society. [Downloadable!]
  7. Xiaohong Chen & Oliver Linton & Ingrid Van Keilegom, 2003. "Estimation of Semiparametric Models when the Criterion Function is not Smooth," STICERD - Econometrics Paper Series /2003/450, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
    Other versions:
  8. Richard Blundell & Xiaohong Chen & Dennis Kristensen, 2003. "Nonparametric IV estimation of shape-invariant Engel curves," CeMMAP working papers CWP15/03, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
  9. Herman J. Bierens & Werner Ploberger, 1997. "Asymptotic Theory of Integrated Conditional Moment Tests," Econometrica, Econometric Society, vol. 65(5), pages 1129-1152, September.
    Other versions:
  10. Chernozhukov, Victor & Hansen, Christian, 2006. "Instrumental quantile regression inference for structural and treatment effect models," Journal of Econometrics, Elsevier, vol. 132(2), pages 491-525, June. [Downloadable!] (restricted)
  11. Guerre, Emmanuel & Lavergne, Pascal, 2002. "Optimal Minimax Rates For Nonparametric Specification Testing In Regression Models," Econometric Theory, Cambridge University Press, vol. 18(05), pages 1139-1171, October. [Downloadable!]
  12. Ma, Lingjie & Koenker, Roger, 2006. "Quantile regression methods for recursive structural equation models," Journal of Econometrics, Elsevier, vol. 134(2), pages 471-506, October. [Downloadable!] (restricted)
    Other versions:
  13. Honore, Bo E & Hu, Luojia, 2004. "On the Performance of Some Robust Instrumental Variables Estimators," Journal of Business & Economic Statistics, American Statistical Association, vol. 22(1), pages 30-39, January.
  14. Donald, Stephen G. & Imbens, Guido W. & Newey, Whitney K., 2003. "Empirical likelihood estimation and consistent tests with conditional moment restrictions," Journal of Econometrics, Elsevier, vol. 117(1), pages 55-93, November. [Downloadable!] (restricted)
  15. Whitney K. Newey & James L. Powell, 2003. "Instrumental Variable Estimation of Nonparametric Models," Econometrica, Econometric Society, vol. 71(5), pages 1565-1578, 09. [Downloadable!] (restricted)
  16. Joel Horowitz & Sokbae 'Simon' Lee, 2006. "Nonparametric instrumental variables estimation of a quantile regression model," CeMMAP working papers CWP09/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
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