Template-Type:ReDIF-Paper 1.0  
Title:How to deal with unobservable variables in economics
Author-Name: Krelle, Wilhelm
Classification-JEL:C15, C32, C51, C52
Keywords: 	 parameter estimation, forecasting, Germany, Schneeweiß
Abstract: The paper discusses different methods to deal with unobservable variables: Kalman-Filtering,
	principal components, factor analysis, LISREL, MIMIC, DYMIMIC, PLS with respect to parameter estimation
	and forecasting. We got very good results by an extension of Kalman-Filtering called AS (general stationary
	parameter model). LISREL proved to be superior to PLS in parameter estimation. Explicit introduction of the
	latent variables "mood" of the economic agents, the "political trend" and "social stability" improved the
	forecasting performance of an econometric model of the FRG. 
Length: pages
Creation-Date: 1997-08
Revision-Date: 
Handle: RePEc:bon:bonsfb:414
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonsfb/bonsfb414.pdf
File-Format: application/pdf
File-Size: 25471 bytes