A Principal Components Analysis of Common Stochastic Trends in Heterogeneous Panel Data: Some Monte Carlo Evidence

B-Tier
Journal: Oxford Bulletin of Economics and Statistics
Year: 1999
Volume: 61
Issue: S1
Pages: 749-767

Authors (3)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

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

Abstract

In this paper we propose a new approach based on principal components analysis to test for the number of common stochastic trends driving the non‐stationary series in a panel data set. This test has the advantage that it is also consistent when there is a mixture of I(0) and I(1) series, making it unnecessary to pre‐test the panel for unit root. Furthermore, the test solves the problem of dimensionality encountered in large panel data sets.

Technical Details

RePEc Handle
repec:bla:obuest:v:61:y:1999:i:s1:p:749-767
Journal Field
General
Author Count
3
Added to Database
2026-01-25