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When it counts -- Econometric identification of the basic factor model based on GLT structures

Sylvia Frühwirth-Schnatter, Darjus Hosszejni, Hedibert Freitas Lopes

arXiv 16 Jan 2023 · Statistics — Methodology · publishedEconometrics (2023) · 13 citations (OpenAlex)

arXiv:2301.06354 · PDF · DOI · OpenAlex · Extracted main text

Abstract

Despite the popularity of factor models with sparse loading matrices, little attention has been given to formally address identifiability of these models beyond standard rotation-based identification such as the positive lower triangular (PLT) constraint. To fill this gap, we review the advantages of variance identification in sparse factor analysis and introduce the generalized lower triangular (GLT) structures. We show that the GLT assumption is an improvement over PLT without compromise: GLT is also unique but, unlike PLT, a non-restrictive assumption. Furthermore, we provide a simple counting rule for variance identification under GLT structures, and we demonstrate that within this model class the unknown number of common factors can be recovered in an exploratory factor analysis. Our methodology is illustrated for simulated data in the context of post-processing posterior draws in Bayesian sparse factor analysis.

Citation extraction

43
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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
1Anderson, T. W. and H. Rubin (1956) Statistical inference in factor analysis1.000114100%
2Frühwirth-Schnatter, S., D. Hosszejni, and H. F. Lopes (2022) Sparse finite Bayesian factor analysis when the number of factors is unknown1.00083100%
3Reiersl, O (1950) On the identifiability of parameters in Thurstone's multiple factor analysis1.00053100%
4Tumura, Y. and M. Sato (1980) On the identification in factor analysis0.96510490%
5Sato, M (1992) A study of an identification problem and substitute use of principal component analysis in factor analysis0.9416483%
6Conti, G., S. Frühwirth-Schnatter, J. J. Heckman, and R. Piatek (2014) Bayesian exploratory factor analysis0.73732100%
7Lopes, H. F. and M. West (2004) Bayesian model assessment in factor analysis self0.73732100%
8Frühwirth-Schnatter, S. and H. Lopes (2018) Sparse Bayesian Factor Analysis when the Number of Factors is Unknown0.64422100%
9Geweke, J. F. and G. Zhou (1996) Measuring the pricing error of the arbitrage pricing theory0.64422100%
10Hosszejni, D. and S. Frühwirth-Schnatter (2022) Cover it up! Bipartite graphs uncover identifiability in sparse factor analysis self0.64422100%

Showing the top 10 of 43 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
1Cover It Up! Bipartite Graphs Uncover Identifiability in Sparse Factor Analysis1.00083