An asymptotic invariance property of the common trends under linear transformations of the data

A-Tier
Journal: Journal of Econometrics
Year: 2014
Volume: 178
Issue: P2
Pages: 310-315

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

It is well known that if Xt is a nonstationary process and Yt is a linear function of Xt, then cointegration of Yt implies cointegration of Xt. We want to find an analogous result for common trends if Xt is generated by a finite order VAR with i.i.d. (0,Ωx) errors εxt. We first show that Yt has an infinite order VAR representation in terms of its white noise prediction errors, εyt, which are a linear process in εxt, the prediction error for Xt. We then apply this result to show that the limit of the common trends for Yt generated by εyt, are linear functions of the common trends for Xt, generated by εxt.

Technical Details

RePEc Handle
repec:eee:econom:v:178:y:2014:i:p2:p:310-315
Journal Field
Econometrics
Author Count
2
Added to Database
2026-01-25