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Journal of Econometric Methods

Ed. by Giacomini, Raffaella / Li, Tong


Mathematical Citation Quotient (MCQ) 2018: 0.06

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2156-6674
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Testing Competing Models for Non-negative Data with Many Zeros

João M. C. Santos Silva / Silvana Tenreyro
  • London School of Economics and CfM, CREI, CEP, CEPR, Department of Economics, 32 Lincoln’s Inn Fields, 2.17, London WC2A 3PH, UK
  • Other articles by this author:
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/ Frank Windmeijer
Published Online: 2014-03-29 | DOI: https://doi.org/10.1515/jem-2013-0005

Abstract

In economic applications it is often the case that the variate of interest is non-negative and its distribution has a mass-point at zero. Many regression strategies have been proposed to deal with data of this type but, although there has been a long debate in the literature on the appropriateness of different models, formal statistical tests to choose between the competing specifications are not often used in practice. We use the non-nested hypothesis testing framework of Davidson and MacKinnon (Davidson and MacKinnon 1981. “Several Tests for Model Specification in the Presence of Alternative Hypotheses.” Econometrica 49: 781–793.) to develop a novel and simple regression-based specification test that can be used to discriminate between these models.

This article offers supplementary material which is provided at the end of the article.

Keywords: health economics; international trade; non-nested hypotheses; C test; P test

JEL Codes: C12; C52

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About the article

Corresponding author: João M. C. Santos Silva, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, UK and CEMAPRE, Rua do Quelhas 6, 1200-781 Lisboa, Portugal, E-mail:


Published Online: 2014-03-29

Published in Print: 2015-01-01


Citation Information: Journal of Econometric Methods, Volume 4, Issue 1, Pages 29–46, ISSN (Online) 2156-6674, ISSN (Print) 2194-6345, DOI: https://doi.org/10.1515/jem-2013-0005.

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