Nonparametric regression under dependent errors with infinite variance
Abstract
We consider local least absolute deviation (LLAD) estimation for trend functions of time series with heavy tails which are characterised via a symmetric stable law distribution. The setting includes both causal stable ARMA model and fractional stable ARIMA model as special cases. The asymptotic limit of the estimator is established under the assumption that the process has either short or long memory autocorrelation. For a short memory process, the estimator admits the same convergence rate as if the process has the finite variance. The optimal rate of convergence n−2/5 is obtainable by using appropriate bandwidths. This is distinctly different from local least squares estimation, of which the convergence is slowed down due to the existence of heavy tails. On the other hand, the rate of convergence of the LLAD estimator for a long memory process is always slower than n−2/5 and the limit is no longer normal.Download Info
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Paper provided by London School of Economics and Political Science in its series Open Access publications from London School of Economics and Political Science with number http://eprints.lse.ac.uk/22874/.Length:
Date of creation: Mar 2004
Date of revision:
Publication status: Published in Annals of the Institute of Statistical Mathematics (2004-03) v.56, p.73-86
Handle: RePEc:ner:lselon:http://eprints.lse.ac.uk/22874/
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Web page: http://www.lse.ac.uk
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Jia Chen & Li-Xin Zhang, 2010. "Local linear M-estimation for spatial processes in fixed-design models," Metrika, Springer, vol. 71(3), pages 319-340, May.
- Ngai Chan & Rongmao Zhang, 2009. "M-estimation in nonparametric regression under strong dependence and infinite variance," Annals of the Institute of Statistical Mathematics, Springer, vol. 61(2), pages 391-411, June.
- Toshio Honda, 2010. "Nonparametric estimation of conditional medians for linear and related processes," Annals of the Institute of Statistical Mathematics, Springer, vol. 62(6), pages 995-1021, December.
- Toshio Honda, 2009. "Nonparametric density estimation for linear processes with infinite variance," Annals of the Institute of Statistical Mathematics, Springer, vol. 61(2), pages 413-439, June.
- Qi Li & Jeffrey Scott Racine, 2006. "Nonparametric Econometrics: Theory and Practice," Economics Books, Princeton University Press, edition 1, volume 1, number 8355.
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