Momentary Lapses: Moment Expansions and the Robustness of Minimum Distance Estimation

Abstract
This paper explores the robustness of minimum distance (GMM) estimators focusing particularly on the effect of intermediate covariance matrix estimation on final estimator performance. Asymptotic expansions to orderOp(n−3/2) are employed to constructO(n−2) expansions for the variance of estimators constructed from preliminary least-squares and generalM-estimators. In the former case, there is a rather curious robustifying effect due to estimation of the Eicker-White covariance matrix for error distributions with sufficiently large kurtosis.

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