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BVARs and Stochastic Volatility

Joshua Chan

arXiv 22 Oct 2023 · Econometrics · 1 citations (OpenAlex)

arXiv:2310.14438 · PDF · DOI · OpenAlex · Extracted main text

Abstract

Bayesian vector autoregressions (BVARs) are the workhorse in macroeconomic forecasting. Research in the last decade has established the importance of allowing time-varying volatility to capture both secular and cyclical variations in macroeconomic uncertainty. This recognition, together with the growing availability of large datasets, has propelled a surge in recent research in building stochastic volatility models suitable for large BVARs. Some of these new models are also equipped with additional features that are especially desirable for large systems, such as order invariance -- i.e., estimates are not dependent on how the variables are ordered in the BVAR -- and robustness against COVID-19 outliers. Estimation of these large, flexible models is made possible by the recently developed equation-by-equation approach that drastically reduces the computational cost of estimating large systems. Despite these recent advances, there remains much ongoing work, such as the development of parsimonious approaches for time-varying coefficients and other types of nonlinearities in large BVARs.

Citation extraction

151
references
230
in-text mentions
151
distinct cited
6
self-citations
8,827
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
1Primiceri (2005) Time Varying Structural Vector Autoregressions and Monetary Policy1.000125100%
2Cogley and Sargent (2005) Drifts and volatilities: Monetary policies and outcomes in the post WWII US1.00085100%
3Carriero, Clark, and Marcellino (2019) Large Bayesian vector autoregressions with stochastic volatility and non-conjugate priors1.00054100%
4Carriero, Clark, and Marcellino (2016) Common drifting volatility in large Bayesian VARs1.00053100%
5Chan and Eisenstat (2018) Bayesian Model Comparison for Time-Varying Parameter VARs with Stochastic Volatility0.92843100%
6Hauzenberger, Huber, Koop, and Mitchell (2022) Bayesian modeling of time-varying parameters using regression trees0.84333100%
7Chan (2020) Large Bayesian VARs: A Flexible Kronecker Error Covariance Structure self0.84333100%
8Carriero, Clark, Marcellino, and Mertens (2022) Addressing COVID-19 outliers in BVARs with stochastic volatility0.81142100%
9Cross, Hou, Koop, and Poon (2023) Large stochastic volatility in mean VARs0.73732100%
10Chan, Koop, and Yu (2023) Large order-invariant Bayesian VARs with stochastic volatility0.73732100%

Showing the top 10 of 151 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
1Large Bayesian Tensor VARs with Stochastic Volatility0.40511