News impact curve for stochastic volatility models

C-Tier
Journal: Economics Letters
Year: 2013
Volume: 120
Issue: 1
Pages: 130-134

Score contribution per author:

0.335 = (α=2.01 / 3 authors) × 0.5x C-tier

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

Abstract

This paper proposes a couple of new methods to compute the news impact curve for stochastic volatility (SV) models. The new methods incorporate the joint movement of return and volatility, which has been ignored by the extant literature. The first method employs the Bayesian Markov chain Monte Carlo scheme and the other one employs the rejection sampling. The both methods are simple, versatile, and applicable to various SV models. Contrary to the monotonic news impact functions in the extant literature, the both methods give the U-shaped news impact curves comparable to the GARCH models. They also capture the volatility asymmetry for the asymmetric SV models.

Technical Details

RePEc Handle
repec:eee:ecolet:v:120:y:2013:i:1:p:130-134
Journal Field
General
Author Count
3
Added to Database
2026-01-26