A new approach to causality and economic growth.

This paper examines the issue of causality in cross-sectional empirical models of economic growth. Using an approach to determining causal structures based on tests for conditional independence in sets of variables, we uncover alternative causal structures that are consistent with the correlation pattern of the variables in the data. We use these methods to develop alternative causal empirical models of economic growth. One of our consistent findings is that we can rule out the possibility that equipment investment causes growth. Our search procedure leads naturally to a structural model with latent variables which we then estimate. The results of our estimation are broadly consistent with traditional models of economic growth augmented for human capital.Economic development ; Econometric models

Physical instrumental vetoes for gravitational-wave burst triggers

We present a robust strategy to \emph{veto} certain classes of instrumental glitches that appear at the output of interferometric gravitational-wave (GW) detectors.This veto method is `physical' in the sense that, in order to veto a burst trigger, we make use of our knowledge of the coupling of different detector subsystems to the main detector output. The main idea behind this method is that the noise in an instrumental channel X can be \emph{transferred} to the detector output (channel H) using the \emph{transfer function} from X to H, provided the noise coupling is \emph{linear} and the transfer function is \emph{unique}. If a non-stationarity in channel H is causally related to one in channel X, the two have to be consistent with the transfer function. We formulate two methods for testing the consistency between the burst triggers in channel X and channel H. One method makes use of the \emph{null-stream} constructed from channel H and the \emph{transferred} channel X, and the second involves cross-correlating the two. We demonstrate the efficiency of the veto by `injecting' instrumental glitches in the hardware of the GEO 600 detector. The \emph{veto safety} is demonstrated by performing GW-like hardware injections. We also show an example application of this method using 5 days of data from the fifth science run of GEO 600. The method is found to have very high veto efficiency with a very low accidental veto rate.Comment: Minor changes, To appear in Phys. Rev.

Universal Estimation of Directed Information

Four estimators of the directed information rate between a pair of jointly stationary ergodic finite-alphabet processes are proposed, based on universal probability assignments. The first one is a Shannon--McMillan--Breiman type estimator, similar to those used by Verd\'u (2005) and Cai, Kulkarni, and Verd\'u (2006) for estimation of other information measures. We show the almost sure and $L_1$ convergence properties of the estimator for any underlying universal probability assignment. The other three estimators map universal probability assignments to different functionals, each exhibiting relative merits such as smoothness, nonnegativity, and boundedness. We establish the consistency of these estimators in almost sure and $L_1$ senses, and derive near-optimal rates of convergence in the minimax sense under mild conditions. These estimators carry over directly to estimating other information measures of stationary ergodic finite-alphabet processes, such as entropy rate and mutual information rate, with near-optimal performance and provide alternatives to classical approaches in the existing literature. Guided by these theoretical results, the proposed estimators are implemented using the context-tree weighting algorithm as the universal probability assignment. Experiments on synthetic and real data are presented, demonstrating the potential of the proposed schemes in practice and the utility of directed information estimation in detecting and measuring causal influence and delay.Comment: 23 pages, 10 figures, to appear in IEEE Transactions on Information Theor