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학술대회자료

TESTING FOR UNIT ROOTS USING WEIGHTED MOMENT CONDITIONS

TESTING FOR UNIT ROOTS USING WEIGHTED MOMENT CONDITIONS

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We propose new unit root tests based on instrumental variables estimation utilizing weighted moment conditions. Under the null hypothesis, the asymptotic distribution of the proposed test statistics is standard normal. The normality result holds in more general models using different types of linear deterministic trends and different detrending methods. An important advantage is that the IV unit root tests do not entail nuisance parameters. In addition, the power of the new tests compares quite favorably with existing unit root tests.

1 Introduction

2 IV Tests

3 Simulations

4 Summary and Concluding Remarks

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