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THE BOX-COX METHODOLOGY: A 26-YEAR MISTAKE

Octavio Ramirez and J Shonkwiler

No 271037, 1990 Annual meeting, August 5-8, Vancouver, Canada from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: The Box-Cox methodology has been extensively applied since it·was first introduced in 1964. This study establishes that the function currently used as a basis for implementing the Box-Cpx methodology is not a valid probability qensity function. The proper density function associated with the random variable underlying the Box-Cox methodology is derived.· Simulation evidence documents that the original Box-cox approach can result in considerable bias.

Keywords: Agricultural and Food Policy; Research Methods/ Statistical Methods (search for similar items in EconPapers)
Pages: 12
Date: 1990-08-05
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea90:271037

DOI: 10.22004/ag.econ.271037

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