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Functional Approximations to Likelihoods/Posterior Densities: A Neural Network Approach to Efficient Sampling

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Author Info
Lennart F. Hoogerheide
Johan F. Kaashoek
Abstract

The performance of Monte Carlo integration methods like importance-sampling or Markov-Chain Monte-Carlo procedures depends greatly on the choice of the importance- or candidate-density. Such a density must typically be "close" to the target density to yield numerically accurate results with efficient sampling. Neural networks are natural importance- or candidate-densities since they have a universal approximation property and are easy to sample from. That is, conditional upon the specified neural network, sampling can be done either directly or using a Gibbs sampling technique, possibly with auxiliary variables. We propose such a class of methods, a key step for which is the construction of a neural network that approximates the target density accurately. The methods are tested on a set of illustrative models that includes a mixture of normal distributions, a Bayesian instrumental-variable regression problem with weak instruments and near-identification, and a two-regime growth model for US recessions and expansions. These examples involve experiments with non-standard, non-elliptical posterior distributions. The results indicate the feasibility of the neural network approach

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Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2004 with number 74.

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Date of creation: 11 Aug 2004
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Handle: RePEc:sce:scecf4:74

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Related research
Keywords: Markov chain Monte Carlo; importance sampling; neural networks; Bayesian inference;

Find related papers by JEL classification:
C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Bayesian Analysis
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics

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  5. Kleibergen, Frank & van Dijk, Herman K., 1998. "Bayesian Simultaneous Equations Analysis Using Reduced Rank Structures," Econometric Theory, Cambridge University Press, vol. 14(06), pages 701-743, December. [Downloadable!]
    Other versions:
  6. Neil Shephard, 2005. "Stochastic Volatility," Economics Papers 2005-W17, Economics Group, Nuffield College, University of Oxford. [Downloadable!]
  7. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-84, March. [Downloadable!] (restricted)
  8. Frank Kleibergen & Herman K. van Dijk, 1998. "Bayesian Simultaneous Equations Analysis using Reduced Rank Structures," Tinbergen Institute Discussion Papers 98-025/4, Tinbergen Institute. [Downloadable!]
  9. Kloek, Tuen & van Dijk, Herman K, 1978. "Bayesian Estimates of Equation System Parameters: An Application of Integration by Monte Carlo," Econometrica, Econometric Society, vol. 46(1), pages 1-19, January. [Downloadable!] (restricted)
  10. Kleibergen, F.R. & Van Dijk, H.K., 1993. "On the Shape of the Likelyhood/Posterior in Cointegration Models," Papers 9315-a, Erasmus University of Rotterdam - Econometric Institute.
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  11. Schotman, Peter & van Dijk, Herman K., 1991. "A Bayesian analysis of the unit root in real exchange rates," Journal of Econometrics, Elsevier, vol. 49(1-2), pages 195-238. [Downloadable!] (restricted)
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  12. Chib, Siddhartha & Greenberg, Edward, 1996. "Markov Chain Monte Carlo Simulation Methods in Econometrics," Econometric Theory, Cambridge University Press, vol. 12(03), pages 409-431, August. [Downloadable!]
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  14. repec:cup:etheor:v:12:y:1996:i:3:p:409-31 is not listed on IDEAS
  15. Paap, R. & Dijk, H.K. van, 2002. "Bayes estimates of Markov trends in possibly cointegrated series: an application to US consumption and income," Econometric Institute Report EI 2002-42 Revision_Date:, Erasmus University Rotterdam, Econometric Institute. [Downloadable!]
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