Work

Testing Competing Models for Non-negative Data with Many Zeros

Year: 2014

Type: article

Abstract: In economic applications it is often the case that the variate of interest is non-negative and its distribution has a mass-point at zero. Many regression strategies have been proposed to deal with data of this type but, although there has been a long debate in the literature on the appropriateness of different models, formal statistical tests to choose between the competing specifications are not often used in practice. We use the non-nested hypothesis testing framework of Davidson and MacKinnon (Davidson and MacKinnon 1981. “Several Tests for Model Specification in the Presence of Alternative Hypotheses.” Econometrica 49: 781–793.) to develop a novel and simple regression-based specification test that can be used to discriminate between these models.

Source: Journal of Econometric Methods

DOI: 10.1515/jem-2013-0005

Authors: João M. C. Santos Silva, Silvana Tenreyro, Frank Windmeijer

Institutions: University of Essex, Centre for Economic Policy Research, London School of Economics and Political Science, University of Bristol

Language: English

Topic: Statistical Distribution Estimation and Applications

Subfield: Statistics and Probability

Field: Mathematics

Domain: Physical Sciences

Open Access status: bronze

Funder: Economic and Social Research Council

Awards: Centre for Economic Performance 2010-2015, Working towards a stable and sustainable growth path