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Estimating TVP-VAR models with time invariant long-run multipliers

Denis Belomestny, Ekaterina Krymova, Andrey Polbin

arXiv 3 Aug 2020 · Econometrics

arXiv:2008.00718 · PDF · DOI · OpenAlex · Extracted main text

Abstract

The main goal of this paper is to develop a methodology for estimating time varying parameter vector auto-regression (TVP-VAR) models with a timeinvariant long-run relationship between endogenous variables and changes in exogenous variables. We propose a Gibbs sampling scheme for estimation of model parameters as well as time-invariant long-run multiplier parameters. Further we demonstrate the applicability of the proposed method by analyzing examples of the Norwegian and Russian economies based on the data on real GDP, real exchange rate and real oil prices. Our results show that incorporating the time invariance constraint on the long-run multipliers in TVP-VAR model helps to significantly improve the forecasting performance.

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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
1Primiceri, G.E (2005) Time varying structural vector autoregressions and monetary policy1.000113100%
2Del Negro, M., Primiceri, G.E (2015) Time varying structural vector autoregressions and monetary policy: a corrigendum1.00074100%
3Carter, C.K., Kohn, R (1994) On gibbs sampling for state space models0.81142100%
4Canova, F., Pérez Forero, F.J (2015) Estimating overidentified, nonrecursive, time-varying coefficients structural vector autoregressions0.51121100%
5Cogley, T., Sargent, T.J (2005) Drifts and volatilities: monetary policies and outcomes in the post wwii us0.51121100%
6Altig, D., Christiano, L.J., Eichenbaum, M., Linde, J (2011) Firm-specific capital, nominal rigidities and the business cycle0.40511100%
7Antolin-Diaz, J., Drechsel, T., Petrella, I (2017) Tracking the slowdown in long-run gdp growth0.40511100%
8Baumeister, C., Peersman, G (2013) Time-varying effects of oil supply shocks on the us economy0.40511100%
9Broda, C (2004) Terms of trade and exchange rate regimes in developing countries0.40511100%
10Krueger, F (2015) bvarsv: Bayesian analysis of a vector autoregressive model with stochastic volatility and time-varying parameters0.40511100%

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