With or Without U? - The appropriate test for a U shaped relationship.

Lind, Jo Thori and Mehlum, Halvor (2007): With or Without U? - The appropriate test for a U shaped relationship.

Abstract

Non-linear relationships are common in economic theory, and such relationships are also frequently tested empirically. We argue that the usual test of non-linear relationships is flawed, and derive the appropriate test for a U shaped relationship. Our test gives the exact necessary and sufficient conditions for the test of a U shape in both finite samples and for a large class of models.

• Item Type: MPRA Paper
• Institution: Department of Economics, University of Oslo
• Language: English
• Keywords: U shape; hypothesis test; Kuznets curve; Fieller interval
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C12 - Hypothesis Testing: General; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C20 - General

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