Covariate Unit Root Tests with Good Size and Power
Abstract
The selection of the truncation lag for covariate unit root tests is analyzed using Monte Carlo simulation. It is shown that standard information criteria such as the BIC or the AIC can result in tests with large size distortions. Modifi ed information criteria can be used to construct tests with good size and power. An empirical illustration is provided.Download Info
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Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2011-4.Length: 31 pages
Date of creation: 01 May 2011
Date of revision:
Handle: RePEc:ris:albaec:2011_004
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Related research
Keywords: unit root tests; truncation lag; information criteria; vector autoregressions;Other versions of this item:
- Fossati, Sebastian, 2012. "Covariate unit root tests with good size and power," Computational Statistics & Data Analysis, Elsevier, vol. 56(11), pages 3070-3079.
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-18 (All new papers)
- NEP-ECM-2011-06-18 (Econometrics)
- NEP-ETS-2011-06-18 (Econometric Time Series)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Kazuki Hiraga, 2011. "New Methods for Testing the Sustainability of Government Debt," Keio/Kyoto Joint Global COE Discussion Paper Series 2011-020, Keio/Kyoto Joint Global COE Program.
- Fossati, Sebastian, 2011. "Unit Root Testing with Stationary Covariates and a Structural Break in the Trend Function," Working Papers 2011-10, University of Alberta, Department of Economics.
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