Scandinavian Working Papers in Economics
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Department of Economics, Lund University Working Papers, Department of Economics, Lund University

No 2004:1:
Toward a Unified Approach to Testing for Weak Separability

Barry Jones (), Thomas Elger, David Edgerton () and Donald Dutkowsky

Abstract: In this paper we propose a unified framework for testing weak separability. We present a new three-step procedure, which is a joint test of necessary and sufficient conditions that takes account of the possibilities of both measurement error and incomplete adjustment. We illustrate the operational capability of the procedure with an empirical example. At the present time our procedure works well in medium sized samples, but may not be practical for datasets with extremely large sample sizes. As computing technology continues to advance, however, high-powered methods like the one we propose should supplant testing approaches that were originally designed to circumvent computational limitations

Keywords: Weak separability; measurement error; incomplete adjustment; (follow links to similar papers)

JEL-Codes: C14; D11; (follow links to similar papers)

13 pages, January 21, 2004

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This paper is published as:
Jones, Barry, Thomas Elger, David Edgerton and Donald Dutkowsky, (2005), 'Toward a Unified Approach to Testing for Weak Separability', Economics Bulletin, Vol. 3, No. 20, pages 1-7

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