Approximately Normal Tests for Equal Predictive Accuracy in Nested Models

Forecast evaluation often compares a parsimonious null model to a larger model that nests the null model. Under the null that the parsimonious model generates the data, the larger model introduces noise into its forecasts by estimating parameters whose population values are zero. We observe that the mean squared prediction error (MSPE) from the parsimonious model is therefore expected to be smaller than that of the larger model. We describe how to adjust MSPEs to account for this noise. We propose applying standard methods (West (1996)) to test whether the adjusted mean squared error difference is zero. We refer to nonstandard limiting distributions derived in Clark and McCracken (2001, 2005a) to argue that use of standard normal critical values will yield actual sizes close to, but a little less than, nominal size. Simulation evidence supports our recommended procedure.

Using Out-of-Sample Mean Squared Prediction Errors to Test the Martingale Difference

We consider using out-of-sample mean squared prediction errors (MSPEs) to evaluate the null that a given series follows a zero mean martingale difference against the alternative that it is linearly predictable. Under the null of no predictability, the population MSPE of the null "no change" model equals that of the linear alternative. We show analytically and via simulations that despite this equality, the alternative model's sample MSPE is expected to be greater than the null's. For rolling regression estimators of the alternative model's parameters, we propose and evaluate an asymptotically normal test that properly accounts for the upward shift of the sample MSPE of the alternative model. Our simulations indicate that our proposed procedure works well.

Approximately normal tests for equal predictive accuracy in nested models

Forecast evaluation often compares a parsimonious null model to a larger model that nests the null model. Under the null that the parsimonious model generates the data, the larger model introduces noise into its forecasts by estimating parameters whose population values are zero. We observe that the mean squared prediction error (MSPE) from the parsimonious model is therefore expected to be smaller than that of the larger model. We describe how to adjust MSPEs to account for this noise. We propose applying standard methods (West (1996)) to test whether the adjusted mean squared error difference is zero. We refer to nonstandard limiting distributions derived in Clark and McCracken (2001, 2005a) to argue that use of standard normal critical values will yield actual sizes close to, but a little less than, nominal size. Simulation evidence supports our recommended procedure.

Decomposition of Hessenberg DAE systems to state space form

AbstractAn algorithm is given for symbolically decoupling the solutions to a linear, time dependent differential-algebraic equation Ez′ = A(t)z + ⨍(t), z(t)ϵRs, in Hessenberg form into state and algebraic components. The state variables are the solutions to an ordinary differential equation with initial conditions restricted to a subspace of Rs, while the algebraic components are linear functions of the state variables involving derivatives of the coefficients and input functions up to order r − 1, where r is the index of the system. This decomposition provides closed form solutions to linear Hessenberg DAEs in terms of the fundamental solutions of the state variable system. The implications of the algorithm for computing consistent initial conditions, for certain singular optimal control problems, and for numerical solutions are briefly discussed

Evaluation of Reversible Lanes (Nicholasville Road; Lexington, KY)

The study involved an evaluation of reversibIe lanes as a method of increasing traffic flow. A unique feature of the system was allowing Ieft turns during the period of reversible flow, which meant that the left-turn lanes had to be moved and the signal displays shifted during operation and without interrupting traffic flow. The evaluation involved a comparison of data taken before and after installation of the reversible lanes. Types of data included delays, volumes, accidents, speeds, traffic conflicts, fuel consumption, and environmental factors. Installation of the reversible lanes resulted in a significant savings in travel time in the peak direction. There was a large increase in travel times in the off-peak direction in the afternoon. An economic analysis based on current operating times showed a benefit-cost ratio of 6.90. The reversibIe-lane system was successful; although, better signal coordination would improve operation. Data taken on two parallel arterial streets indicated reversible lanes on those streets are not warranted

College Students’ Views on Drug Policy in the United States: The Impact of Reading Michelle Alexander’s The New Jim Crow

Using a quasi-experimental research design to test the “Marshall Hypothesis,” we investigated the effects of reading Michelle Alexander’s The New Jim Crow: Mass Incarceration and the Age of Colorblindness on college students’ views of drug policy in the United States. One hundred and twenty-eight undergraduate stu- dents at a predominantly white Midwest university took part in this study. Test subjects read the text and took both a pre- and posttest questionnaire, while a control group of students, who did not read the book, was also surveyed concerning their views on drug policies. Additionally, reflective essays written by the test population were also analyzed. Findings offer limited support for the Marshall Hypothesis, which asserts that a properly informed constituency would conclude that certain policies in the U.S. are unjust. Students, in general, showed significant changes in their perceptions of drug policies after reading the text. However, disaggregating students by gender showed that female students, more than male students, are more convinced by Alexander’s arguments that current drug policy unfairly target communities of color

Growth, Yield, and Efficiency of Potassium Fertilizer Use in Burley Tobacco Production

For many crops, band placement of fertilizer offers agronomic, economic, and environmental advantages over commonly used preplant broadcast applications. Drill banding most of the nitrogen (N) fertilizer 12 inches to both sides of the row for tobacco shortly after transplanting greatly aIleviates manganese toxicity and other nutrient imbalances, improves early growth and yield, and offers increased efficiency of N use. Nitrogen fertilizers applied after transplanting are less likely to be leached during excess rainfall events that commonly occur in April and early May in Kentucky