Testing weak exogeneity in cointegrated panels

C-Tier
Journal: Applied Economics
Year: 2015
Volume: 47
Issue: 30
Pages: 3216-3228

Authors (2)

Enrique Moral-Benito (Banco de España) Luis Serv鮠 (not in RePEc)

Score contribution per author:

0.503 = (α=2.01 / 2 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

For reasons of empirical tractability, analysis of cointegrated economic time series is often developed in a partial setting, in which a subset of variables is explicitly modelled conditional on the rest. This approach yields valid inference only if the conditioning variables are weakly exogenous for the parameters of interest. This article proposes a new test of weak exogeneity in panel cointegration models. The test has a limiting Gumbel distribution that is obtained by first letting <inline-formula id="ILM0001"><inline-graphic xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="raec_a_1013611_ilm0001.gif"/></inline-formula> and then letting <inline-formula id="ILM0002"><inline-graphic xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="raec_a_1013611_ilm0002.gif"/></inline-formula>. We evaluate the accuracy of the asymptotic approximation in finite samples via simulation experiments. Finally, as an empirical illustration, we test weak exogeneity of disposable income and wealth in aggregate consumption.

Technical Details

RePEc Handle
repec:taf:applec:v:47:y:2015:i:30:p:3216-3228
Journal Field
General
Author Count
2
Added to Database
2026-01-26