Entropy 2010, 12(3), 516-527; doi:10.3390/e12030516
Article

Recovering Matrices of Economic Flows from Incomplete Data and a Composite Prior

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Received: 3 December 2009; Accepted: 1 March 2010 / Published: 12 March 2010
(This article belongs to the Special Issue Entropy and Information)
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract: In several socioeconomic applications, matrices containing information on flows-trade, income or migration flows, for example–are usually not constructed from direct observation but are rather estimated, since the compilation of the information required is often extremely expensive and time-consuming. The estimation process takes as point of departure another matrix which is adjusted until it optimizes some divergence criterion and simultaneously is consistent with some partial information-row and column margins–of the target matrix. Among all the possible criteria to be considered, one of the most popular is the Kullback-Leibler divergence [1], leading to the well-known Cross-Entropy technique. This paper proposes the use of a composite Cross-Entropy approach that allows for introducing a mixture of two types of a priori information–two possible matrices to be included as point of departure in the estimation process. By means of a Monte Carlo simulation experiment, we will show that under some circumstances this approach outperforms other competing estimators. Besides, a real-world case with a matrix of interregional trade is included to show the applicability of the suggested technique.
Keywords: cross-entropy estimation; data-weighted priors; matrices of flows; economic applications
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MDPI and ACS Style

Fernández-Vázquez, E. Recovering Matrices of Economic Flows from Incomplete Data and a Composite Prior. Entropy 2010, 12, 516-527.

AMA Style

Fernández-Vázquez E. Recovering Matrices of Economic Flows from Incomplete Data and a Composite Prior. Entropy. 2010; 12(3):516-527.

Chicago/Turabian Style

Fernández-Vázquez, Esteban. 2010. "Recovering Matrices of Economic Flows from Incomplete Data and a Composite Prior." Entropy 12, no. 3: 516-527.


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