Discussion Papers no. 204

Change in regime and Markow models

In this paper we point out that using a two-state Markov chain to describe change in regime makes it difficult to interpret the model since there is a bias towards frequent shifts. However, by using a finite Markov chain with a transition matrix satisfying certain restrictions it is possible to circumvent the difficulty and at the same time use the established procedures for estimation and filtering. The methods are applied to a couple of time series from the Norwegian quarterly national accounts.

Om publikasjonen

Tittel

Change in regime and Markow models

Ansvarlig

Anders Rygh Swensen

Serie og -nummer

Discussion Papers no. 204

Utgiver

Statistics Norway, Research Department

Emne

Discussion Papers

ISSN

1892-753X

Antall sider

19

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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