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Inference in a Stationary/Nonstationary Autoregressive Time-Varying-Parameter Model

Donald W. K. Andrews, Ming Li

arXiv 1 Nov 2024 · Econometrics · publishedQuantitative Economics (2025) · 1 citations (OpenAlex)

arXiv:2411.00358 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper considers nonparametric estimation and inference in first-order autoregressive (AR(1)) models with deterministically time-varying parameters. A key feature of the proposed approach is to allow for time-varying stationarity in some time periods, time-varying nonstationarity (i.e., unit root or local-to-unit root behavior) in other periods, and smooth transitions between the two. The estimation of the AR parameter at any time point is based on a local least squares regression method, where the relevant initial condition is endogenous. We obtain limit distributions for the AR parameter estimator and t-statistic at a given point $\tau$ in time when the parameter exhibits unit root, local-to-unity, or stationary/stationary-like behavior at time $\tau$. These results are used to construct confidence intervals and median-unbiased interval estimators for the AR parameter at any specified point in time. The confidence intervals have correct asymptotic coverage probabilities with the coverage holding uniformly over stationary and nonstationary behavior of the observations.

Citation extraction

61
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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
1Mikusheva, Anna (2007) Uniform inference in autoregressive models0.8434375%
2Andrews, Donald W. K., Xu Cheng, and Patrik Guggenberger (2020) Generic results for establishing the asymptotic size of confidence sets and tests self0.7373367%
3Giraitis, Liudas, George Kapetanios, and Anthony Yates (2014) Inference on stochastic time-varying coefficient models0.64422100%
4Andrews, Donald W. K (1991) Asymptotic optimality of generalized $C_L$, cross-validation, and generalized cross-validation in regression with heteroskedasti… self0.64422100%
5Andrews, Donald W. K. and Patrik Guggenberger (2014) A conditional-heteroskedasticity-robust confidence interval for the autoregressive parameter self0.64422100%
6Li, Ker-Chau (1987) Asymptotic optimality for $C_p$, $C_L$, cross-validation and generalized cross-validation: discrete index set0.64422100%
7Stock, James H (1991) Confidence intervals for the largest autoregressive root in US macroeconomic time series0.64422100%
8Cole, Stephen, Enrique Martinez-Garcia, and Eric R. Sims (2023) Living up to expectations: Central bank credibility, the effectiveness of forward guidance, and inflation dynamics post-global f…0.58531100%
9Hansen, Bruce E (1999) The grid bootstrap and the autoregressive model0.5114225%
10Bernanke, Ben S (2020) The new tools of monetary policy0.51121100%

Showing the top 10 of 61 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
1Initial-Condition-Robust Inference in Autoregressive Models0.40511