The Econometric Analysis of Microscopic Simulation Models

Y. Li, A.C.D. Donkers, B. Melenberg

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Abstract

Microscopic simulation models are often evaluated based on visual inspection of the results.This paper presents formal econometric techniques to compare microscopic simulation (MS) models with real-life data.A related result is a methodology to compare different MS models with each other.For this purpose, possible parameters of interest, such as mean returns, or autocorrelation patterns, are classified and characterized.For each class of characteristics, the appropriate techniques are presented.We illustrate the methodology by comparing the MS model developed by Levy, Levy, and Solomon (2000) and the market fraction model developed by He and Li (2005a, b) with actual data
Original languageEnglish
Place of PublicationTilburg
PublisherEconometrics
Number of pages47
Volume2006-99
Publication statusPublished - 2006

Publication series

NameCentER Discussion Paper
Volume2006-99

Keywords

  • Microscopic simulation models
  • Econometric analysis

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