Inference in Predictive Quantile Regressions

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Tác giả: Nina Kuriyama, Alex Maynard, Katsumi Shimotsu

Ngôn ngữ: eng

Ký hiệu phân loại: 519.5 Statistical mathematics

Thông tin xuất bản: 2023

Mô tả vật lý:

Bộ sưu tập: Metadata

ID: 197411

This paper studies inference in predictive quantile regressions when the predictive regressor has a near-unit root. We derive asymptotic distributions for the quantile regression estimator and its heteroskedasticity and autocorrelation consistent (HAC) t-statistic in terms of functionals of Ornstein-Uhlenbeck processes. We then propose a switching-fully modified (FM) predictive test for quantile predictability. The proposed test employs an FM style correction with a Bonferroni bound for the local-to-unity parameter when the predictor has a near unit root. It switches to a standard predictive quantile regression test with a slightly conservative critical value when the largest root of the predictor lies in the stationary range. Simulations indicate that the test has a reliable size in small samples and good power. We employ this new methodology to test the ability of three commonly employed, highly persistent and endogenous lagged valuation regressors - the dividend price ratio, earnings price ratio, and book-to-market ratio - to predict the median, shoulders, and tails of the stock return distribution.
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