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A Bistochastic Nonparametric Estimator

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Abstract

We explore the relevance of adopting a bistochastic nonparametric estimator. This estimator has two main implications. First, the estimator reduces variability according to the robust criterion of second-order stochastic (and Lorenz) dominance. This is a universally criterion in risk and welfare economics, which expands the applicability of nonparametric estimation in economics, for instance to the measurement of economic discrimination. Second, the bistochastic estimator produces smaller errors than do positive-weights nonparametric estimators, in terms of the bias-variance trade-off. This result is verified in a general simulation exercise. This improvement is due to a significant reduction in boundary bias, which makes the estimator itself useful in empirical applications. Finally, consistency, preservation of the mean value, and multidimensional extension are some other useful properties of this estimator.

Suggested Citation

  • Juan Gabriel Rodríguez & Rafael Salas, 2004. "A Bistochastic Nonparametric Estimator," Economic Working Papers at Centro de Estudios Andaluces E2004/22, Centro de Estudios Andaluces.
  • Handle: RePEc:cea:doctra:e2004_22
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    1. Diebold, Francis X. & Nason, James A., 1990. "Nonparametric exchange rate prediction?," Journal of International Economics, Elsevier, vol. 28(3-4), pages 315-332, May.
    2. Delgado, Miguel A & Miles, Daniel, 1997. "Household Characteristics and Consumption Behaviour: A Nonparametric Approach," Empirical Economics, Springer, vol. 22(3), pages 409-429.
    3. Jean-Yves Duclos & Peter J. Lambert, 2000. "A normative and statistical approach to measuring classical horizontal inequity," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 87-113, February.
    4. Cowell, Frank A & Victoria-Feser, Maria-Pia, 1996. "Robustness Properties of Inequality Measures," Econometrica, Econometric Society, vol. 64(1), pages 77-101, January.
    5. Juan Gabriel Rodríguez & Rafael Salas & Irene Perrote, 2005. "Partial Horizontal Inequity Orderings: A Non-parametric Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(3), pages 347-368, June.
    6. Dasgupta, Partha & Sen, Amartya & Starrett, David, 1973. "Notes on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 180-187, April.
    7. Bertschek, Irene & Entorf, Horst, 1996. "On Nonparametric Estimation of the Schumpeterian Link between Innovation and Firm Size: Evidence from Belgium, France, and Germany," Empirical Economics, Springer, vol. 21(3), pages 401-426.
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    Cited by:

    1. Juan Prieto-Rodríguez & Víctor Fernández-Blanco, 2006. "Optimal pricing and grant policies for museums," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 30(3), pages 169-181, December.
    2. Juan Prieto-Rodríguez & Rafael Salas & Santiago Álvarez-García, "undated". "The Evolution Of Income Inequality In The European Union," Working Papers 10-02 Classification-JEL , Instituto de Estudios Fiscales.

    More about this item

    Keywords

    nonparametric estimation; second-order stochastic dominance; bistochastic estimator;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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