Alternative bias approximations in first-order dynamic reduced form models
Article Abstract:
The small sample bias of the least squares estimator has been examined in a first-order dynamic reduced form model with normally-distributed white noise disturbances and an arbitrary number of exogenous regressors. Results indicate that the least squares bias can be significant in dynamic reduced form equations. There is a sharp increase in the bias when the standard deviation of the reduced form disturbance increases. The bias corrected estimator works only when disturbances are small.
Publication Name: Journal of Economic Dynamics & Control
Subject: Economics
ISSN: 0165-1889
Year: 1999
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Capacity utilization and market power
Article Abstract:
A study presents a macroeconomic model of determining factors affecting capacity underutilization in business cycles. The model presents in particular an economy consisting of a final and intermediate goods sectors faced with idiosyncratic demand uncertainty. The proportion of firms with idle capacities have a significant impact on the short-term response of the economy to exogenous stimuli. It also affects the relative significance of quantity and price adjustments.
Publication Name: Journal of Economic Dynamics & Control
Subject: Economics
ISSN: 0165-1889
Year: 1997
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