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Econometrics 2019, 7(1), 1; https://doi.org/10.3390/econometrics7010001

The Specification of Dynamic Discrete-Time Two-State Panel Data Models

1
Research School of Economics, The Australian National University, Acton ACT 2601, Australia
2
Motu Economic and Public Policy Research, P.O. Box 24390, Wellington 6142, New Zealand
*
Authors to whom correspondence should be addressed.
Received: 1 November 2018 / Revised: 16 December 2018 / Accepted: 18 December 2018 / Published: 24 December 2018
Full-Text   |   PDF [291 KB, uploaded 24 December 2018]

Abstract

This paper compares two approaches to analyzing longitudinal discrete-time binary outcomes. Dynamic binary response models focus on state occupancy and typically specify low-order Markovian state dependence. Multi-spell duration models focus on transitions between states and typically allow for state-specific duration dependence. We show that the former implicitly impose strong and testable restrictions on the transition probabilities. In a case study of poverty transitions, we show that these restrictions are severely rejected against the more flexible multi-spell duration models. View Full-Text
Keywords: panel data; transition data; binary response; duration analysis; event history analysis; dynamic models; censored data; initial conditions; random effects panel data; transition data; binary response; duration analysis; event history analysis; dynamic models; censored data; initial conditions; random effects
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 (CC BY 4.0).
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Gørgens, T.; Hyslop, D.R. The Specification of Dynamic Discrete-Time Two-State Panel Data Models. Econometrics 2019, 7, 1.

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