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- Title
Reducing Approximation Error in the Fourier Flexible Functional Form.
- Authors
Skolrud, Tristan D.
- Abstract
The Fourier Flexible form provides a global approximation to an unknown data generating process. In terms of limiting function specification error, this form is preferable to functional forms based on second-order Taylor series expansions. The Fourier Flexible form is a truncated Fourier series expansion appended to a second-order expansion in logarithms. By replacing the logarithmic expansion with a Box-Cox transformation, we show that the Fourier Flexible form can reduce approximation error by 25% on average in the tails of the data distribution. The new functional form allows for nested testing of a larger set of commonly implemented functional forms.
- Subjects
APPROXIMATION error; FOURIER transforms; FOURIER analysis; FOURIER series; LOGARITHMS
- Publication
Econometrics (2225-1146), 2017, Vol 5, Issue 4, p53
- ISSN
2225-1146
- Publication type
Article
- DOI
10.3390/econometrics5040053