In this paper we show that contrary to the claim made in Longstaff, Santa-Clara, and Schwartz (2000a) and Longstaff, Santa-Clara, and Schwartz (2000b) discrete string models are not more parsimonious than market models. In fact, they are found to be observationally equivalent. We derived that...

In this paper we show that discrete string models are observationally equivalent to market models. Furthermore, the parsimony of the models is investigated and determined. As a consequence of the observational equivalence we show that discrete string models are a special case of the HJM...