Nonlinearities and regimes in conditional correlations with different dynamics

A-Tier
Journal: Journal of Econometrics
Year: 2020
Volume: 217
Issue: 2
Pages: 496-522

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

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

Abstract

New parameterizations of the dynamic conditional correlation (DCC) model and of the regime-switching dynamic correlation (RSDC) model are introduced, such that these models provide a specific dynamics for each correlation. They imply a nonlinear autoregressive form of dependence on lagged correlations and are based on properties of the Hadamard exponential matrix. The new models are applied to a data set of twenty stock market indices and a data set of the thirty Dow Jones components, comparing them to the classical DCC and RSDC models. The empirical results show that the new models improve their classical versions in terms of several criteria.

Technical Details

RePEc Handle
repec:eee:econom:v:217:y:2020:i:2:p:496-522
Journal Field
Econometrics
Author Count
2
Added to Database
2026-01-24