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On Parameter Estimation in Unobserved Components Models subject to Linear Inequality Constraints

Abhishek K. Umrawal, Joshua C. C. Chan

arXiv 23 Oct 2021 · Econometrics

arXiv:2110.12149 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We propose a new quadratic programming-based method of approximating a nonstandard density using a multivariate Gaussian density. Such nonstandard densities usually arise while developing posterior samplers for unobserved components models involving inequality constraints on the parameters. For instance, Chan et al. (2016) provided a new model of trend inflation with linear inequality constraints on the stochastic trend. We implemented the proposed quadratic programming-based method for this model and compared it to the existing approximation. We observed that the proposed method works as well as the existing approximation in terms of the final trend estimates while achieving gains in terms of sample efficiency.

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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
1Chan, J. C., Koop, G., and Potter, S. M (2016) A bounded model of time variation in trend inflation, nairu and the phillips curve self0.96911591%
2Chan, J. C. and Strachan, R. W (2012) Estimation in non-linear non-gaussian state space models with precision-based methods self0.64422100%
3Chan, J. C. and Jeliazkov, I (2009) Efficient simulation and integrated likelihood estimation in state space models self0.40511100%
4Kozlov, M. K., Tarasov, S. P., and Khachiyan, L. G (1980) The polynomial solvability of convex quadratic programming0.40511100%
5Sahni, S (1974) Computationally related problems0.40511100%

Showing the top 5 of 5 scored citations.