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Optimal Invariant Tests in an Instrumental Variables Regression With Heteroskedastic and Autocorrelated Errors

Marcelo J. Moreira, Mahrad Sharifvaghefi, Geert Ridder

arXiv 29 Apr 2017 · Mathematics — Statistics Theory · 7 citations (OpenAlex)

arXiv:1705.00231 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper uses model symmetries in the instrumental variable (IV) regression to derive an invariant test for the causal structural parameter. Contrary to popular belief, we show that there exist model symmetries when equation errors are heteroskedastic and autocorrelated (HAC). Our theory is consistent with existing results for the homoskedastic model (Andrews, Moreira, and Stock (2006) and Chamberlain (2007)). We use these symmetries to propose the conditional integrated likelihood (CIL) test for the causality parameter in the over-identified model. Theoretical and numerical findings show that the CIL test performs well compared to other tests in terms of power and implementation. We recommend that practitioners use the Anderson-Rubin (AR) test in the just-identified model, and the CIL test in the over-identified model.

Citation extraction

29
references
66
in-text mentions
29
distinct cited
5
self-citations
14,760
main-text words

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Moreira and Moreira (2019) Optimal Two-Sided Tests for Instrumental Variables Regression with Heteroskedastic and Autocorrelated Errors self1.000186100%
2Moreira and Ridder (2020) Efficiency Loss of Asymptotically Efficient Tests in an Instrumental Variables Regression1.00053100%
3Chamberlain (2007) Decision Theory Applied to an Instrumental Variables Model0.92843100%
4Moreira (2002) Tests with Correct Size in the Simultaneous Equations Model self0.92843100%
5Moreira (2009) Tests with Correct Size when Instruments Can Be Arbitrarily Weak self0.92843100%
6Andrews, Moreira, and Stock (2006) Optimal Two-Sided Invariant Similar Tests for Instrumental Variables Regression0.84333100%
7Andrews and Mikusheva (2016) Conditional Inference with a Functional Nuisance Parameter0.64422100%
8Andrews and Mikusheva (2020) Optimal Decision Rules for Weak GMM0.64422100%
9Andrews, Moreira, and Stock (2004) Optimal Invariant Similar Tests for Instrumental Variables Regression0.64422100%
10Eaton (1989) Group Invariance Applications in Statistics0.64422100%

Showing the top 10 of 29 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Confidence Sets under Weak Identification: Theory and Practice0.64422
2Optimal Invariant Tests in an Instrumental Variables Regression With Heteroskedastic and Autocorrelated Errors0.40511
3Numerical Analysis of Test Optimality0.40511
4Properties of the Conditional Likelihood Ratio Test under Discrete Approximation0.40511