In this paper we provide a simple locally interactive dynamic model of technology choice and output production. We assume a Cobb-Douglas type production function for two available technologies. The returns to technology 0 are not affected by local spillovers. Technology 1 is more costly, as...

In this paper we propose a locally interactive model which explains both the cross sectional dynamics as well as the possibility of multiple long run equilibria. Firms can choose between two technologies say 1 and 0; the returns from technology 1 are affected by the number of neighboring firms...

In hypothesis testing with nuisance parameters present only under the alternative two issues typically arise: (i) critical values are data dependent and so cannot be tabulated; (ii) we need to choose a functional over the nuisance parameter space. We address the first issue by providing easily...

The aim of this paper is to characterize and analyze long-run comovements among diffusion processes. Broadly speaking, if <italic>X</italic> = (<italic>X</italic>₁,,<italic>X</italic>₂,;t ≥ 0) is a nonergodic diffusion in R², but there exists a linear combination, say, γ′<italic>X</italic>, that is instead ergodic in R, then we say there exists a linear...

Rationality of early release data is typically tested using linear regressions. Thus, failure to reject the null does not rule out the possibility of nonlinear dependence. This paper proposes two tests which instead have power against generic nonlinear alternatives. A Monte Carlo study shows...