SOME ASPECTS OF THE PERFORMANCE OF DIAGNOSTIC CHECKS IN BIVARIATE TIME SERIES MODELS

Abstract
This paper is concerned with the use of score, or Lagrangian multiplier and portmanteau tests of fitted model adequacy in vector autoregressive‐moving average processes. The relation between these alternative diagnostic checking devices is discussed from an asymptotic theoretic standpoint. Some finite sample properties of the tests are investigated in the context of bivariate models using Monte Carlo methods. Asymptotic theory is used to help determine the simulation design and also proves useful in appraising the experimental outcomes. The results provide evidence on the likely relative performance of the two procedures in practice and suggest that the score test is to be preferred.

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