Chow Tests Research Articles

Consistent Testing for Structural Change at the Ends of the Sample

In this paper we provide analytical and Monte Carlo evidence that Chow and Predictive tests can be consistent against alternatives that allow structural change to occur at either end of the sample. Attention is restricted to linear regression models that may have a break in the intercept. The results are based on a novel reparameterization of the actual and potential break point locations. Standard methods parameterize both of these locations as fixed fractions of the sample size. We parameterize these locations as more general integer valued functions. Power at the ends of the sample is evaluated by letting both locations, as a percentage of the sample size, converge to zero or one. We find that for a potential break point function, the tests are consistent against alternatives that converge to zero or one at sufficiently slow rates and are inconsistent against alternatives that converge sufficiently quickly. Monte Carlo evidence supports the theory though large samples are sometimes needed for reasonable power.

Changing Roles of Parental Economic Resources in Children's Educational Attainment

The authors investigated whether the relationship between parents' economic resources and children's educational attainment had changed over time by comparing two cohorts from the Panel Study of Income Dynamics. Using probit regressions and Chow tests, they examined multiple measures of economic resources, including income, net worth, liquid assets, and home ownership. Results show that the associations between parents' liquid assets and college attendance became significantly stronger among the latter cohort, suggesting the increasing importance of liquid assets. Of particular interest is a change in the role of negative liquid assets (unsecured debt exceeding savings) in high school graduation: Among the former cohort, there was no difference in likelihood of graduation between students from families with negative liquid assets and those from families with zero liquid assets, but among the latter cohort, the former were more likely graduate than the latter. Results demonstrate the importance of using diverse measures of economic resources in studying associations between parents' resources and children's educational attainment. KEY WORDS: assets and debt; cohort; education; income; inequality ********** Equal educational opportunity is considered a key indicator of a society's fairness. It is a deep-rooted belief in U.S. culture that every child should have an equal opportunity receive the best possible education. Educational opportunity is of particular importance social workers, whose mission is to enhance human well-being and help meet the basic human needs of all people, with particular attention the needs and empowerment of people who are vulnerable, oppressed, and living in (NASW, 2008, p. 1). Although it is generally recognized that education is a crucial path toward future well-being, it is not clear whether equal educational opportunity exists in the United States. The existing literature indicates that parents' economic resources are strong predictors of educational attainment: Children from high-income and wealthy families are likely achieve better educational outcomes than are economically disadvantaged children (Conley, 2001; Ellwood & Kane, 2000; Mare, 1981). Accordingly, measuring the association between parents' economic resources and children's educational attainment over time should provide a way gauge the United States' progress toward the ideal of equal educational opportunity. This study investigated changes in the role of parents' economic resources over time by comparing two cohorts of children from the Panel Study of Income Dynamics (PSID) data. Given that household wealth is not perfectly correlated with income (Wolff, 1990), we paid special attention parents' assets and used diverse measures of economic resources: income, net worth, liquid assets, and home ownership. BACKGROUND Recent decades have witnessed socioeconomic changes that may have affected educational opportunities. First, the cost of college education has risen rapidly, whereas financial aid has shifted more toward non-need-based aid (Kane, 2004). These changes are expected exacerbate the burden of low-income children in financing college education. Second, the value of a college education has increased continuously since the late 1970s, as reflected in growing earning gaps between workers with and without college degrees (Acemoglu, 2002). The increased value of education will heighten the impact of economic resources if parents with low resources are unable increase investment in their children's education. It is also plausible that it would motivate low-resource parents shift their resources toward children's education (Nam, 2004). Third, income and wealth inequalities have widened in the past few decades (Neckerman & Torche, 2007), and geographic concentration of wealth and poverty has intensified (Massey, 1996). Higher levels of income inequality may have contributed growing educational gaps, improving high-income children's educational outcomes while lowering those of low-income children (Mayer, 2001). …

MEASURING THE EFFECT OF POLICY INTERVENTIONS AT THE POPULATION LEVEL: SOME METHODOLOGICAL CONCERNS

Health policy evaluations estimate the response of population aggregate outcomes to interventions. However, clarity on the form of the expected causal relationship, the parameter identification strategy, and the mode of hypothesis testing is required to overcome a number of conceptual and methodological problems. We use the New Jersey statewide smoking ban as an example. We examine statewide admission rates for acute myocardial infarctions, strokes and lower limb fractures, and emergency room encounter rates for asthma exacerbations before and after the smoking ban. We discuss the identification options and show the sensitivity of estimates of the response function to different specifications of the stochastic and intervention components and to different modes of inference. Model misspecification is demonstrated by rolling Chow tests for structural breaks in repeated observations.

Estimating Transaction-Based Price Indices of Local Commercial Real Estate Markets

This study examines the feasibility of constructing reliable commercial property price indices using property tax records. We employ the Clapp and Giacotto (1992) assessed-value method to estimate price indices from 1988:4 to 2008:4 for commercial properties in Florida. The estimated Florida commercial property price index is compared to the Moody’s/REAL Commercial Property Price Index (CPPI) and to the transaction-based index (TBI) produced by the Commercial Real Estate Data Lab at MIT. Our results are promising, suggesting that this widely-available data source can be used to produce commercial price indices for a wide variety of precise market locations and specific investor segments on an ongoing basis. We use our comprehensive database to examine two specific subsets in more detail. First, we narrow our range to focus on just the office sector for Florida. We compare price movements for the Florida office sector with the comparable CPPI. Estimates produce very similar price movements providing support to both methods. Second, we contrast the price performance of higher- and lower-valued properties. Chow tests indicate that Florida commercial properties assessed at $2.5 million, or above, appreciated on average at greater rates than those assessed below $2.5 million. In addition, our estimates indicate that highervalued properties performed especially well during periods of economic expansion. This finding represents an important contribution toward understanding the relative performance of smaller and institutional-grade commercial properties.

Structural breaks in finance growth nexus: the study of Indonesia

This paper empirically investigates the finance-growth nexus for an annual data set of Indonesia during the last two decades. The purpose is to examine the causal relationship between financial development and economic growth in Indonesia and also to test the structural breaks in the finance-growth relationship to investigate the change in policy regimes. To examine the causal relationship between financial development and economic growth, the newly proposed ARDL bound testing approach by Pesaran et al. (1996) has been applied .The estimated results support the view of Lucas (1988) that finance doesn’t matter for economic growth. Structural break is identified in the year 1997 in Indonesia with the estimated finance-growth relationship. The stability of the estimated relationship is examined with break-point Chow tests (F tests).

Are the effects of cannabis dependence on glucose metabolism similar to schizophrenia? An FDG PET understanding

Background:Cannabis has been associated with transient psychotic states; however, the causal relationship between cannabis and schizophrenia continues to remain a matter of debate. Epidemiological and some biological studies hint at cannabis being an independent risk factor for schizophrenia; this has not been definitively proved.Aims:We aimed to understand the patterns of glucose uptake in important brain regions among individuals with cannabis dependence and schizophrenia. Furthermore, we compared the interregional metabolic rates in pertinent neural circuits among individuals with cannabis dependence, schizophrenia and normal controls.Setting and Design:This is a case-control cross-sectional study that was carried out by a general psychiatry department in collaboration with a nuclear diagnosis unit.Materials and Methods:Male volunteers with cannabis dependence, schizophrenia and normal controls underwent FDG PET scanning. Glucose uptakes in pre-selected regions of interest were compared using MANOVA. Finally, Chow tests were used to compare interregional metabolic relationships in the mesocortical and cortical-subcortical-cerebellum circuits.Results:Significant differences (P<0.05) were noted among individuals with cannabis dependence and schizophrenia in the medial and lateral temporal regions. When the neural circuits were compared, significant interregional differences (P<0.05) were noted between individuals with cannabis dependence and normal controls. However, among individuals with cannabis dependence and schizophrenia, no significant differences (P>0.05) were noted in these patterns.Conclusions:Our findings suggest that cannabis dependence can alter interregional relationships in a manner similar to schizophrenia. This indicates that cannabis could potentially play a role in the development of psychosis by altering neural circuits.

Predictability Revisited: UK Equity Returns 1965-2007

This study tests a large sample of UK equity returns from 1965 to 2007 for predictability. Returns are tested using the Lo and MacKinlay (1988) variance ratio test and the Chow and Denning (1993) multiple variance ratio tests. Overall, the results show strong signs of predictability. There is a size effect, in which small equities appear more predictable in the first half of the sample (1965– 1985), and mid- to large size equities appear more predictable in the second half of the sample (1986–2007).

Changing trends in serious extra-articular manifestations of rheumatoid arthritis among United State veterans over 20 years

The purpose of this study was to examine prevalence trends of serious extra-articular manifestations (EAMs) in a data set representing both hospitalized and ambulatory patients with RA. This retrospective cohort study used serial cross-sectional data to examine the prevalence of serious EAMs in patients with RA from 1985 to 2006 across the United States (US) Veteran's Health Administration system. Serious EAMs included rheumatoid carditis, RA lung disease, FS and pooled EAM rates included previously reported vasculitis prevalence as queried by ICD-9 searches. Statistical analysis employed auto-regression and time series analysis using the Chow and Durbin-Watson tests to detect breakpoints and linear time-trends. Among 3 million veterans, including >35,000 RA patients annually, we noted declining RA hospitalizations emphasizing the importance of examining both the inpatient and outpatient settings to assess EAM prevalence. Individual EAM trends varied, demonstrating linear declines in FS, increases in RA lung disease and significant breakpoint declines in carditis and pooled serious EAMs. Pooled EAM prevalence dropped around 2000, from an early linear trend peak of 10% among inpatients, to <7% among both inpatients and outpatients by 2006. Overall, serious EAMs of RA have declined among US veterans in both the inpatient and outpatient settings, with the exception of RA lung disease likely reflecting improved detection. Breakpoints in pooled EAM prevalence appear to demonstrate consistent, true declines in severe RA extra-articular disease around 2000. Future work should explore the relationship between temporal EAM trends and specific RA therapies including adoption of biological agents.

Taking and Testing Jurisprudential Regimes Seriously: A Response to Lax and Rader

Lax and Rader critique our use of the Chow test in our series of articles on jurisprudential regimes on the grounds that individual justices votes are not statistically independent, which constitutes a violation of assumptions underlying the Chow test. In this response we point out that the Chow tests constituted only one part of our analysis; we also conducted a sensitivity analysis to look at the strength of the Chow tests compared to other sequential splits. Most importantly, we required that the observed statistical patterns of change be theoretically consistent with the legal changes made by the regime changing decisions; we note two areas where we did preliminary analyses that produced statistically significant results, but where those results did not make sense in light of the jurisprudence. We repeat both our Chow tests and individual interaction tests taking into account the clustering of observations. Our reanalysis provides support for some, but not all, of our original results.

Research Note: The Impact of Korean TV Dramas on Taiwanese Tourism Demand for Korea

This study examines the effects of popular Korean TV dramas on Taiwanese outbound travel to Korea between 1997 and the end of 2005. The popularity of Korean TV dramas began with the drama Fireworks, first shown in Taiwan from July to September 2000. Based on that information, the data were divided into two subsamples: January 1997 to September 2000 and October 2000 to December 2005. The Chow tests revealed a significant structural change in the total number of Taiwanese visitors to Korea between the two sample periods. Additional analyses indicated that a significant structural change was attributable mainly to the increase in pleasure travel, further demonstrating the strong effects of Korean TV series in Taiwan. Empirical results support the concept of film-induced tourism.

Decline in rheumatoid vasculitis prevalence among US veterans: A retrospective cross‐sectional study

To examine trends in the prevalence of rheumatoid vasculitis in a national US population comprising both hospitalized and ambulatory patients with rheumatoid arthritis (RA). In this serial cross-sectional study, we analyzed data on hospitalized and ambulatory patients spanning 22 years (1985-2006) and 10 years (1997-2006), respectively, to determine the prevalence of rheumatoid vasculitis, as defined by the International Classification of Diseases, Ninth Revision. Our search encompassed data collected on a predominantly male study population during 10 million hospitalizations and outpatient visits, and included annual data on >37,000 RA patients. To test for a decrease in rheumatoid vasculitis prevalence, breakpoint analysis was performed using stepwise Chow and Durbin-Watson tests. There was a clear decline in the prevalence of rheumatoid vasculitis, and this decline remained evident even after accounting for a decreased number of hospitalizations among RA patients. Peak prevalence occurred among hospitalized patients in the 1980s, and prevalence gradually declined throughout the 1990s. Furthermore, simultaneous breakpoints representing a significant drop in rheumatoid vasculitis prevalence between the years 2000 and 2001 were demonstrated for both inpatients (P < 0.000) and outpatients (P < 0.003). The prevalence of vasculitis dropped 53% among inpatients and 31% among outpatients between 2000 and 2001. Our results demonstrate a significant decline in rheumatoid vasculitis prevalence after 2000 in this nationwide sample of hospitalized and ambulatory patients. The clear, consistent drop in prevalence provides an opportunity for the formulation of causal hypotheses, including consideration of the impact of biologic agents used to treat RA, on rheumatoid vasculitis.

Maternal zinc deficiency affects postnatal growth and glucose homeostasis in rat pups differently depending upon adequacy of nutrient intake

The "thrifty" phenotype hypothesis suggests that inadequate nutrition (IN) during fetal life results in permanent metabolic modifications and increased risk of diabetes. Effects of moderate maternal zinc (Zn) deficiency on growth and glucose homeostasis in the offspring and the interaction between maternal Zn deficiency and postnatal nutrition are not well understood. Rats were fed Zn deficient (ZnD, 7 μg/g) or control diet (CON, 25 μg/g) for 3 wks, bred and kept on ZnD diet during pregnancy+lactation. Litters were culled to 7 pups/dam (AN adequate nutrition) or 13 pups/dam (IN), and another group to 3‐4 pups/dam (EN excess nutrition) at 10 d. After weaning, pups were fed rat chow, and insulin and glucose tolerance tests were done at 5 and 10 wks. Lower serum Zn and weight gain was found in ZnD‐IN than in CON‐IN pups at 20 d, but ZnD‐AN and ZnD‐EN pups weighed more than controls (+10% and +40%) with increased serum IGF‐1 in the ZnD‐AN group and increased serum glucose and insulin in the ZnD‐EN group. ZnD‐AN rats had insulin insensitivity compared to CON‐AN rats at 5 and 10 wks. At 15 wks, male ZnD‐AN rats had higher serum leptin than CON‐AN rats. Maternal Zn deficiency interacts with postnatal nutrition, resulting in divergent effects on growth and insulin resistance in the offspring. Prenatal Zn deficiency may have subsequent and potentially long term effects on glucose homeostasis through altering leptin signaling in male rats.

How are neighbourhood design features valued across different neighbourhood types?

In this paper, we examine whether implicit prices of neighbourhood design features in the housing market vary significantly across traditional, neo-traditional, and conventional suburban neighbourhood types. The set of neighbourhood design features we examine here include neighbourhood development density, street network connectivity, pedestrian access to transit and commercial stores, and land use mixture. Using data from Washington County, Oregon, we first use statistical procedures to identify distinct neighbourhood types. We then employ hedonic price analyses and a series of spatial Chow tests to obtain implicit prices of design attributes for houses in each neighbourhood type. We find that traditional design features such as higher street network connectivity and better pedestrian access to transit and commercial stores are valued more in the traditional and neo-traditional neighbourhoods, and that conventional neighbourhood features such as lower housing density and higher degree of homogeneous land uses are valued more in the suburban neighbourhoods.

Impact of a Specialized Early Intervention Service for Psychotic Disorders on Patient Characteristics, Service Use, and Hospital Costs in a Defined Catchment Area

To evaluate the impact of a new early intervention service for first-episode psychosis on patient characteristics, service use, and hospital costs. We examined clinical records of all first admissions to hospitals of patients diagnosed with first-episode psychoses (nonaffective) over a 3-year period before and after the introduction of an early intervention service, the Prevention and Early Intervention Program for Psychosis (PEPP), in a defined catchment area. We examined demographic, clinical, and service use indices covering a 2-year period subsequent to the index admission for each patient. Patients in the post-PEPP phase were significantly younger (P < 0.01), were more often male (P < 0.05), and were less likely to be admitted to hospital with an involuntary status (P < 0.05) or with injuries (P < 0.05) at the time of their first hospital admission. Over the 2 years following the initial admission, post-PEPP patients had significantly fewer admissions to a regular psychiatric service (P < 0.001) and made significantly fewer visits to the hospital emergency department (P < 0.01). There was a significant mean reduction in costs per case of regular hospital bed use ($1028.49, SD 528.02, compared with $792.28, SD 528.02; P < 0.01) and emergency visits ($519.18, SD 353.79, compared with $353.79, SD 345.0; P < 0.01). Time series analyses followed by Chow tests failed to confirm that these cost changes could be attributed specifically to the introduction of an early intervention service. Introduction of a specialized early intervention program may be beneficial to patients and to the health care system. To evaluate the cost-benefit ratio of early intervention services, longer term and more detailed data may be required.

Detecting neglected parameter heterogeneity with Chow tests

The paper demonstrates through a number of Monte Carlo experiments that, for the type of cross-section data sets typically encountered in applied economics, Chow tests on sorted variations of the data matrix can detect neglected parameter heterogeneity. The paper focuses on heterogeneity in the behavioural responses of economic actors that belong to different economically meaningful groups, such as the young, middle-aged, and old. Since the suggested methodology is easy to implement yet powerful, its routine use by applied economists would be desirable given the very significant estimation bias that can result from neglecting parameter heterogeneity.

ADAKAH PERUBAHAN KONSENTRASI SPASIAL INDUSTRI MANUFAKTUR DI INDONESIA, 1976-2001?

Although a number of economists and business strategists have recently become more interested in spatial analysis, very few has examined the phenomena of regional clustering in Indonesia using regional data. This paper explores to what extent the unequal geographic distribution of manufacturing activities in Indonesia has persisted or changed over time. The Theil’s entropy index is proved useful to highlight the uneven geographic distribution in Indonesia. First, we find that Indonesia constitutes an extreme case of geographic concentration. Second, the entropy between islands has played a prominent role in explaining the spatial inequality across provinces in Indonesia. Third, the pattern of spatial inequality formed a “U” curve suggesting a period of dispersing manufacturing activity has been replaced by a period of increasing geographic concentration. Fourth, the Chow tests confirm that structural change has occurred from 1985 onwards. Our findings challenge the general consensus in the new economic geography that trade liberalization encourages dispersing manufacturing activity.

REIT Investments and Hedging Against Inflation

Executive Summary. This paper investigates the relationship between equity and mortgage real estate investment trust (REIT) returns and inflation. The objective is to establish whether securitized real estate investments provide a reliable inflation hedge. Regression results show that real REIT returns are negatively correlated with the unexpected component of inflation. Therefore, equity and mortgage REIT investments may not offer a safe haven during inflationary periods. Chow tests confirm that there is evidence of a decoupling of REITs from the general stock market for more recent intervals. Fama's proxy hypothesis is also tested: the negative relationship between REITs and inflation is symptomatic of a positive relationship between REITs and real economic activity. However, no support is found for this hypothesis.

Relative importance of contingency variables for advanced manufacturing technology

The academic literature on manufacturing technology was reviewed to identify key contingency variables that can moderate the influence of advanced manufacturing technologies on manufacturing performance. Using this literature as a basis, this research proposes an ordering of relative importance of individual contingency variables among a set of contingency variables that influence the advanced manufacturing technologies–manufacturing performance relationship. Plant level data from a large multi-industry sample of firms are analysed, using regression and Chow tests, to confirm the hypothesized ordering among the contingency variables. The findings indicate that lean manufacturing and work organization practices are the primary contingency variables that affect the advanced manufacturing technologies–manufacturing performance relationship. The implications of the results are discussed in the light of past findings and their impact on practice.

Christmas Gift Search Behaviors

This study explores the underlying determinants of in-store information search for a Christmas clothing gift, focusing specifically on cross-cultural differences. A self-administered survey, containing personality, situational, demographic, and search behavior measures, was distributed to a sample of actual consumers residing in 3 countries: Canada, the United States, and the United Kingdom. Confirmatory factor analysis revealed 3 distinct and reliable in-store search behaviors (macro, micro, and salesclerk help); exploratory factor analyses revealed 23 independent factors (13 personality and 10 situational). Country sample differences were assessed using chi-square tests, ANOVAs, MANCOVAs, multiple regression analyses, and Chow tests. Cross-national differences were found with respect to the relationships/importance of the various search antecedents to in-store search behaviors. Other observed between-country differences and directions for future research are also discussed.

GRETL: Econometric software for the GNU generation

Journal of Applied EconometricsVolume 18, Issue 1 p. 105-110 Software Review GRETL: Econometric software for the GNU generation Giovanni Baiocchi, Corresponding Author Giovanni Baiocchi jb35@york.ac.uk Department of Environment, University of York, York YO10 5DD, UKDepartment of Environment, University of York, York YO10 5DD, UK.Search for more papers by this authorWalter Distaso, Walter Distaso Department of Economics, University of Exeter, Exeter EX4 4PU, UKSearch for more papers by this author Giovanni Baiocchi, Corresponding Author Giovanni Baiocchi jb35@york.ac.uk Department of Environment, University of York, York YO10 5DD, UKDepartment of Environment, University of York, York YO10 5DD, UK.Search for more papers by this authorWalter Distaso, Walter Distaso Department of Economics, University of Exeter, Exeter EX4 4PU, UKSearch for more papers by this author First published: 18 February 2003 https://doi.org/10.1002/jae.704Citations: 53Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume18, Issue1January/February 2003Pages 105-110 RelatedInformation