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Testing Competing Models for Non-negative Data with Many Zeros

Santos Silva, Joao M C and Tenreyro, Silvana and Windmeijer, Frank (2015) 'Testing Competing Models for Non-negative Data with Many Zeros.' Journal of Econometric Methods, 4 (1). p. 18. ISSN 2194-6345

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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.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 14 Jan 2015 14:58
Last Modified: 14 Jan 2015 14:58
URI: http://repository.essex.ac.uk/id/eprint/12306

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