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

Tue Gørgens () and Dean Hyslop ()
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Tue Gørgens: Research School of Economics, The Australian National University, Acton ACT 2601, Australia

Econometrics, 2018, vol. 7, issue 1, 1-16

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.

Keywords: panel data; transition data; binary response; duration analysis; event history analysis; dynamic models; censored data; initial conditions; random effects (search for similar items in EconPapers)
JEL-codes: B23 C C00 C01 C1 C2 C3 C4 C5 C8 (search for similar items in EconPapers)
Date: 2018
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Working Paper: The specification of dynamic discrete-time two-state panel data models (2016) Downloads
Working Paper: The specification of dynamic discrete-time two-state panel data models (2016) Downloads
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