Inference on Filtered and Smoothed Probabilities in Markov-Switching Autoregressive Models

A-Tier
Journal: Journal of Business & Economic Statistics
Year: 2019
Volume: 37
Issue: 3
Pages: 484-495

Authors (3)

Rocio Alvarez (not in RePEc) Maximo Camacho (Universidad de Murcia) Manuel Ruiz (not in RePEc)

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

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

Abstract

We derive a statistical theory that provides useful asymptotic approximations to the distributions of the single inferences of filtered and smoothed probabilities, derived from time series characterized by Markov-switching dynamics. We show that the uncertainty in these probabilities diminishes when the states are separated, the variance of the shocks is low, and the time series or the regimes are persistent. As empirical illustrations of our approach, we analyze the U.S. GDP growth rates and the U.S. real interest rates. For both models, we illustrate the usefulness of the confidence intervals when identifying the business cycle phases and the interest rate regimes.

Technical Details

RePEc Handle
repec:taf:jnlbes:v:37:y:2019:i:3:p:484-495
Journal Field
Econometrics
Author Count
3
Added to Database
2026-01-25