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Use of Prior Information

  • Thomas B. Fomby
  • Stanley R. Johnson
  • R. Carter Hill

Abstract

Econometric models are estimated in order to learn about unknown economic parameters. In many cases, however, the investigator begins the statistical analysis not only with sample information but other information as well. It may be known from theoretical arguments that the marginal propensity to consume lies between zero and one. Or it may be known from past experience that the demand for wheat is price inelastic. If the information is correct, it would seem useful to combine it with the sample information in subsequent analysis and statistical estimation. Such information may be valuable in increasing the precision of estimates, especially when the sample information is limited.

Keywords

Prior Information Maximum Likelihood Estimator Risk Function Positive Semidefinite Error Sense 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 1984

Authors and Affiliations

  • Thomas B. Fomby
    • 1
  • Stanley R. Johnson
    • 2
  • R. Carter Hill
    • 3
  1. 1.Department of EconomicsSouthern Methodist UniversityDallasUSA
  2. 2.The Center for Agricultural and Rural DevelopmentIowa State UniversityAmesUSA
  3. 3.Department of EconomicsLouisiana State UniversityBaton RougeUSA

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