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Bayesian SAR model with stochastic volatility and multiple time-varying weights

Michele Costola, Matteo Iacopini, Casper Wichers

arXiv 26 Oct 2023 · Statistics — Applications · publishedJournal of Financial Econometrics (2024)

arXiv:2310.17473 · PDF · DOI · OpenAlex · Extracted main text

Abstract

A novel spatial autoregressive model for panel data is introduced, which incorporates multilayer networks and accounts for time-varying relationships. Moreover, the proposed approach allows the structural variance to evolve smoothly over time and enables the analysis of shock propagation in terms of time-varying spillover effects. The framework is applied to analyse the dynamics of international relationships among the G7 economies and their impact on stock market returns and volatilities. The findings underscore the substantial impact of cooperative interactions and highlight discernible disparities in network exposure across G7 nations, along with nuanced patterns in direct and indirect spillover effects.

Citation extraction

43
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in-text mentions
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distinct cited
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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
1Debarsy, N. and LeSage, J. P (2022) Bayesian model averaging for spatial autoregressive models based on convex combinations of different types of connectivity matri…1.00053100%
2Bonaccolto, G., Caporin, M., and Panzica, R (2019) Estimation and model-based combination of causality networks among large us banks and insurance companies0.87452100%
3Baker, S. R., Bloom, N., and Davis, S. J (2016) Measuring economic policy uncertainty0.73732100%
4Anselin, L (1988) Spatial econometrics: Methods and models, volume 40.64422100%
5Billio, M., Getmansky, M., Lo, A. W., and Pelizzon, L (2012) Econometric measures of connectedness and systemic risk in the finance and insurance sectors0.64422100%
6LeSage and Pace (2009) Introduction to spatial econometrics0.64422100%
7Billio, M., Caporin, M., Panzica, R., and Pelizzon, L (2023) The impact of network connectivity on factor exposures, asset pricing, and portfolio diversification0.51121100%
8Neal, R. M (2003) Slice sampling0.51121100%
9Abiad, A. and Qureshi, I. A (2023) The macroeconomic effects of oil price uncertainty0.40511100%
10Ahlgren, N. and Antell, J (2017) Tests for abnormal returns in the presence of event-induced cross-sectional correlation0.40511100%

Showing the top 10 of 43 scored citations.