Extreme bounds analysis

Econometric technique

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In econometrics, extreme bounds analysis is a type of sensitivity analysis which attempts to determine the most extreme possible estimates for a fixed subset of allowed coefficients and a variable set of linear homogeneous restrictions.[1] It was originally developed by Edward E. Leamer in 1983, and subsequently refined by Clive Granger and Harald Uhlig in 1990.[2] It is a more precise method of measuring specification uncertainty than traditional econometrics because it incorporates prior information, and uses a systematic methodology to examine the fragility of coefficients.[3] It allows researchers to obtain upper and lower limits for the parameter of interest for any possible set of explanatory variables.[4]

## References

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1. ^ Leamer, Edward. "Extreme bounds analysis". The New Palgrave Dictionary of Economics. Retrieved 2018-02-02.
2. ^ Granger, Clive; Uhlig, Harald (1990-04-01). "Reasonable extreme-bounds analysis" (PDF). Journal of Econometrics. 44 (1–2): 159–170\. doi:10.1016/0304-4076(90)90077-7. ISSN 0304-4076.1–2&rft.pages=159-170&rft.date=1990-04-01&rft_id=info:doi/10.1016/0304-4076(90)90077-7&rft.issn=0304-4076&rft.aulast=Granger&rft.aufirst=Clive&rft.au=Uhlig,+Harald&rft_id=http://minneapolisfed.org/research/DP/DP2.pdf&rfr_id=info:sid/en.wikipedia.org:Extreme+bounds+analysis" class="Z3988">
3. ^ Ghosh, Sucharita; Yamarik, Steven (2004-07-01). "Are regional trading arrangements trade creating?: An application of extreme bounds analysis". Journal of International Economics. 63 (2): 369–395\. doi:10.1016/S0022-1996(03)00058-8. ISSN 0022-1996.
4. ^ Moosa, Imad; Cardak, Buly (2006-04-01). "The determinants of foreign direct investment: An extreme bounds analysis" (PDF). Journal of Multinational Financial Management. 16 (2): 199–211\. doi:10.1016/j.mulfin.2005.07.002. ISSN 1042-444X.

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