Log Income vs. Linear Income: An Application of the Encompassing Principle
An open question in empirical economics is whether models should be estimated by using the actual, or linear, values of economic variables or their logarithms. This paper applies the principle of encompassing to suggest specification and mis-specification tests of log vs. linear individual equations fitted to "I"(1) data, and illustrates the analysis for US quarterly disposable income. The finite-sample properties of the encompassing tests are examined in a Monte Carlo experiment customized to the parameter values found in the empirical analysis. Copyright (c) Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2008.
(This abstract was borrowed from another version of this item.)
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1991|
|Date of revision:|
|Note:||To request a hard copy of this paper, please email the department at firstname.lastname@example.org.|
|Contact details of provider:|| Postal: 2424 Maile Way, Honolulu, HI 96822|
Web page: http://www.economics.hawaii.edu/
More information through EDIRC
|Order Information:|| Web: http://www.economics.hawaii.edu/research/working.html Email: |
When requesting a correction, please mention this item's handle: RePEc:hai:wpaper:199111. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Web Technician)
If references are entirely missing, you can add them using this form.