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Local scale models: state space alternative to integrated GARCH processes

Abstract:

State space alternative to autoregressive conditional heteroskedasticity models are proposed. The initial model, which is labelled the Gaussian local scale model, has a measurement density which is Gaussian, conditional on the unobservable precision. The precision is assumed to be a gamma variable which evolves by being scaled by a beta variable. The resulting forecast is a student's t random variable, with a scale which is approximately an exponentially weighted moving average (EWMA) of the ...

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Publication status:
Published
Peer review status:
Peer reviewed

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Institution:
University of Oxford
Division:
SSD
Department:
Economics
Research group:
Econometrics
Oxford college:
Nuffield College
Role:
Author
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Funding agency for:
Shephard, N
Grant:
R000233574
Publisher:
Elsevier Publisher's website
Journal:
Journal of Econometrics Journal website
Volume:
60
Issue:
1-2
Pages:
181-202
Publication date:
1994-01-01
DOI:
ISSN:
0304-4076
Language:
English
Keywords:
Subjects:
UUID:
uuid:e4aff159-f6b0-41a9-973b-8da5596c9e5e
Local pid:
ora:2280
Deposit date:
2008-09-04

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