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Functional Regression with Nonstationarity and Error Contamination: Application to the Economic Impact of Climate Change

Kyungsik Nam, Won-Ki Seo

arXiv 10 Sep 2025 · Statistics — Methodology

arXiv:2509.08591 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper studies a regression model with functional dependent and explanatory variables, both of which exhibit nonstationary dynamics. The model assumes that the nonstationary stochastic trends of the dependent variable are explained by those of the explanatory variables, and hence that there exists a stable long-run relationship between the two variables despite their nonstationary behavior. We also assume that the functional observations may be error-contaminated. We develop novel autocovariance-based estimation and inference methods for this model. The methodology is broadly applicable to economic and statistical functional time series with nonstationary dynamics. To illustrate our methodology and its usefulness, we apply it to evaluating the global economic impact of climate change, an issue of intrinsic importance.

Citation extraction

56
references
163
in-text mentions
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distinct cited
10
self-citations
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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
1Beare, B. K., Seo, J., and Seo, W.-K (2017) Cointegrated linear processes in Hilbert space self0.92843100%
2Chang, Y., Kim, C. S., and Park, J. Y (2016) Nonstationarity in time series of state densities0.8947471%
3Chen, C., Guo, S., and Qiao, X (2022) Functional linear regression: Dependence and error contamination0.87462100%
4Park, J. Y. and Qian, J (2012) Functional regression of continuous state distributions0.87452100%
5Seong, D. and Seo, W.-K (2025) Functional instrumental variable regression with an application to estimating the impact of immigration on native wages self0.86225564%
6Chang, Y., Hu, B., and Park, J. Y (2024) Econometric analysis of functional dynamics in the presence of persistence0.84333100%
7Seo, W.-K. and Shang, H. L (2024) Fractionally integrated curve time series with cointegration self0.84333100%
8Seo, W.-K (2024) Functional principal component analysis for cointegrated functional time series self0.79418550%
9Bosq, D (2000) Linear Processes in Function Spaces0.7374275%
10Nielsen, M. ., Seo, W.-K., and Seong, D (2024) Inference on common trends in functional time series self0.7373367%

Showing the top 10 of 56 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
11cm Inference on common trends in functional time series0.51121