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Transmission of Macroeconomic Shocks to Risk Parameters: Their uses in Stress Testing

Helder Rojas, David Dias

arXiv 19 Sep 2018 · Statistics — Applications · publishedApplied Stochastic Models in Business and Industry (2018) · 1 citations (OpenAlex)

arXiv:1809.07401 · PDF · DOI · OpenAlex · Extracted main text

Abstract

In this paper, we are interested in evaluating the resilience of financial portfolios under extreme economic conditions. Therefore, we use empirical measures to characterize the transmission process of macroeconomic shocks to risk parameters. We propose the use of an extensive family of models, called General Transfer Function Models, which condense well the characteristics of the transmission described by the impact measures. The procedure for estimating the parameters of these models is described employing the Bayesian approach and using the prior information provided by the impact measures. In addition, we illustrate the use of the estimated models from the credit risk data of a portfolio.

Citation extraction

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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
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4Zellner, A (1971) An introduction to Bayesian inference in econometrics0.51121100%
5Vehtari, A., Gelman, A., and Gabry, J (2015) Efficient implementation of leave-one-out cross-validation and waic for evaluating fitted bayesian models0.51121100%
6Watanabe, S (2010) Asymptotic equivalence of bayes cross validation and widely applicable information criterion in singular learning theory0.51121100%
7Bauwens, L. and Lubrano, M (1999) Bayesian dynamic econometrics0.40511100%
8Box, G. E., Jenkins, G. M., Reinsel, G. C., and Ljung, G. M (2015) Time Series Analysis: Forecasting and Control0.40511100%
9Durbin, J. and Koopman, S. J (2012) Time series analysis by state space methods, volume 380.40511100%
10Gelfand, A. E. and Smith, A. F (1990) Sampling-based approaches to calculating marginal densities0.40511100%

Showing the top 10 of 32 scored citations.