DETERMINING THE ORDER OF A VECTOR AUTOREGRESSION WHEN THE NUMBER OF COMPONENT SERIES IS LARGE

Abstract
We contrast the performance of several methods used for identifying the order of vector autoregressive (VAR) processes when the numberKof component series is large. Through simulation experiments we show that their performance is dependent onK, the number of nonzero elements in the polynomial matrices of the VAR parameters and the permitted upper limit of the order used in testing the autoregressive structure. In addition we introduce a new quite powerful multivariate order determination criterion.

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