Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Since their inception, VAR models have been at the centre of many controversies associated with econometric modelling. The recurring criticism throughout history is due to the model being a-theoretic. There is not an underlying theory which is attached to the model therefore it incorporates no prior information. Asteriou and Hall (2011) argue that since there are no initial restrictions on the models parameters, one could deduce that all variables have an effect on everything. However, statistical inference, namely, causality testing can be used to eliminate those variables which are deemed insignificant from the model. Another problem which can occur when using VAR is that the parameters will consume much of the degrees of freedom, insist Gujarati & Porter (2009). For example; if we had a 4 variable model and had chosen to use 8 lags, 32 lagged parameters will exist, which in addition to the constant would total 33. Should the sample size not be sufficiently large, the parameters will use too many degrees of freedom. This will lead to problems withthe estimation.
Finally, VAR cannot be used for policy analysis due to the lack of prior information and a-theoretic nature of the VAR model; therefore the results are incredibly problematic to interpret. However there are methods to overcome this problem. Supporters of the model suggest estimating the impulse response functions thus ascertaining the effects on the variables, should one of them be subject to a shock. There are some advantages to using VAR models. They are very simple to setup. Econometricians need not worry about which variables are endogenous and which are exogenous i.e. originating within or outside the model. Additionally the estimation is extremely simple; each equation can be estimated using the standard OLS method.
a complete demend funtion equation
The primary functions of economists are to teach, contribute research and empirical findings and formulate policies. Most of the professional economists are associated with academi
P2 and P3 play with a penny. P1 picks between same (S) and different (D). After observing P1's choice, P2 and P3 get to picked Simultaneously independently either head (H) and tail
Subsidy programs are likely to have a number of secondary effects in addition to the direct effect on dairy prices. What impact do you suppose farm subsidies are likely to have on
List of major emerging-market economies To determine if the UK is to benefit from growth of emerging-market economies in the future, it should start exporting goods and specif
what is the importance of the quantity theory of money
Compute the mean and variance of the following discrete probability distribution. Where X=2, and P(x)=.5. Where X=8 and P(X) .3. Where X=10 and P(X) =.2.
Balance of T rade A country's present account reflects a money drain when exports exceed imports. The net distinction in-between the dollar value of a world imports an
When single business or corporation dominates its area and squeezes out all its competition, the result is the consumer does not have a open choice, and inevitably, the price of it
Goods Market and Factors Market: Goods market is the market where goods are bought and sold for the purpose of consumption Factors markets are the markets
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd