Keeping the dream of rigorous hypothesis testing alive

This article reviews recent work on hypothesis testing in the American Journal of AGricultural Economics and its predecessor journal, the Journal of Farm Economics

Testing for significance of phase synchronisation dynamics in the EEG

A number of tests exist to check for statistical significance of phase synchronisation within the Electroencephalogram (EEG); however, the majority suffer from a lack of generality and applicability. They may also fail to account for temporal dynamics in the phase synchronisation, regarding synchronisation as a constant state instead of a dynamical process. Therefore, a novel test is developed for identifying the statistical significance of phase synchronisation based upon a combination of work characterising temporal dynamics of multivariate time-series and Markov modelling. We show how this method is better able to assess the significance of phase synchronisation than a range of commonly used significance tests. We also show how the method may be applied to identify and classify significantly different phase synchronisation dynamics in both univariate and multivariate datasets.

Evaluation of the use of high-density SNP genotyping to implement UPOV Model 2 for DUS testing in barley

Developments in high-throughput genotyping provide an opportunity to explore the application of marker technology in distinctness, uniformity and stability (DUS) testing of new varieties. We have used a large set of molecular markers to assess the feasibility of a UPOV Model 2 approach: “Calibration of threshold levels for molecular characteristics against the minimum distance in traditional characteristics”. We have examined 431 winter and spring barley varieties, with data from UK DUS trials comprising 28 characteristics, together with genotype data from 3072 SNP markers. Inter varietal distances were calculated and we found higher correlations between molecular and morphological distances than have been previously reported. When varieties were grouped by kinship, phenotypic and genotypic distances of these groups correlated well. We estimated the minimum marker numbers required and showed there was a ceiling after which the correlations do not improve. To investigate the possibility of breaking through this ceiling, we attempted genomic prediction of phenotypes from genotypes and higher correlations were achieved. We tested distinctness decisions made using either morphological or genotypic distances and found poor correspondence between each method.

Non-concordance between genetic profiles of olive oil and fruit: a cautionary note to the use of DNA markers for provenance testing.

To investigate the contribution of paternal alleles to the DNA content of olive oil, genetic analyses of olive DNA samples from fruits, leaves, and oil derived from the same tree (cv. Leccino) were carried out. DNA extracted from maternal tissues--leaves and flesh--from different fruits showed identical genetic profiles using a set of DNA markers. Additional simple sequence repeat (SSR) alleles, not found in the maternal samples, were amplified in the embryos (stone), and they were also detected in DNA extracted from the paste obtained by crushing whole fruits and from the oil pressed from this material. These results demonstrate that the DNA profile obtained from olive oil is likely to represent a composite profile of the maternal alleles juxtaposed with alleles contributed by various pollen donors. Therefore, care needs to be taken in the interpretation of DNA profiles obtained from DNA extracted from oil for resolving provenance and authenticity issues.

Testing oligopoly theory in the lab

Previous literature is reviewed to account for the existing experimental tests of standard oligopoly-theoretic models.

Business cycle asymmetries: characterisation and testing based on Markov-switching autoregressions

Tests for business cycle asymmetries are developed for Markov-switching autoregressive models. The tests of deepness, steepness, and sharpness are Wald statistics, which have standard asymptotics. For the standard two-regime model of expansions and contractions, deepness is shown to imply sharpness (and vice versa), whereas the process is always nonsteep. Two and three-state models of U.S. GNP growth are used to illustrate the approach, along with models of U.S. investment and consumption growth. The robustness of the tests to model misspecification, and the effects of regime-dependent heteroscedasticity, are investigated.

Testing the expectations theory of the term structure in threshold models

We test the expectations theory of the term structure of U.S. interest rates in nonlinear systems. These models allow the response of the change in short rates to past values of the spread to depend upon the level of the spread. The nonlinear system is tested against a linear system, and the results of testing the expectations theory in both models are contrasted. We find that the results of tests of the implications of the expectations theory depend on the size and sign of the spread. The long maturity spread predicts future changes of the short rate only when it is high.

Fire history and the Global Charcoal Database: a new tool for hypothesis testing and data exploration

Version 1 of the Global Charcoal Database is now available for regional fire history reconstructions, data exploration, hypothesis testing, and evaluation of coupled climate–vegetation–fire model simulations. The charcoal database contains over 400 radiocarbon-dated records that document changes in charcoal abundance during the Late Quaternary. The aim of this public database is to stimulate cross-disciplinary research in fire sciences targeted at an increased understanding of the controls and impacts of natural and anthropogenic fire regimes on centennial-to-orbital timescales. We describe here the data standardization techniques for comparing multiple types of sedimentary charcoal records. Version 1 of the Global Charcoal Database has been used to characterize global and regional patterns in fire activity since the last glacial maximum. Recent studies using the charcoal database have explored the relation between climate and fire during periods of rapid climate change, including evidence of fire activity during the Younger Dryas Chronozone, and during the past two millennia.

Testing the Revised Hierarchical Model: evidence from word associations

The main purpose of the work described in this paper is to examine the extent to which the L2 developmental changes predicted by Kroll and Stewart's (1994) Revised Hierarchical Model (RHM) can be understood by word association response behaviour. The RHM attempts to account for the relative “strength of the links between words and concepts in each of the bilingual's languages” (Kroll, Van Hell, Tokowicz & Green, 2010, p. 373). It proposes that bilinguals with higher L2 proficiency tend to rely less on mediation, while less proficient L2 learners tend to rely on mediation and access L2 words by translating from L1 equivalents. In this paper, I present findings from a simple word association task. More proficient learners provided a greater proportion of collocational links, suggesting that they mediate less when compared to less proficient learners. The results provide tentative support for Kroll and Stewart's model

Testing for bubbles in indirect property price cycles

Speculative bubbles are generated when investors include the expectation of the future price in their information set. Under these conditions, the actual market price of the security, that is set according to demand and supply, will be a function of the future price and vice versa. In the presence of speculative bubbles, positive expected bubble returns will lead to increased demand and will thus force prices to diverge from their fundamental value. This paper investigates whether the prices of UK equity-traded property stocks over the past 15 years contain evidence of a speculative bubble. The analysis draws upon the methodologies adopted in various studies examining price bubbles in the general stock market. Fundamental values are generated using two models: the dividend discount and the Gordon growth. Variance bounds tests are then applied to test for bubbles in the UK property asset prices. Finally, cointegration analysis is conducted to provide further evidence on the presence of bubbles. Evidence of the existence of bubbles is found, although these appear to be transitory and concentrated in the mid-to-late 1990s.

Testing for non-linearity in daily sterling exchange rates

A number of tests for non-linear dependence in time series are presented and implemented on a set of 10 daily sterling exchange rates covering the entire post Bretton-Woods era until the present day. Irrefutable evidence of non-linearity is shown in many of the series, but most of this dependence can apparently be explained by reference to the GARCH family of models. It is suggested that the literature in this area has reached an impasse, with the presence of ARCH effects clearly demonstrated in a large number of papers, but with the tests for non-linearity which are currently available being unable to classify any additional non-linear structure.

Testing for unit roots in bounded time series

Many key economic and financial series are bounded either by construction or through policy controls. Conventional unit root tests are potentially unreliable in the presence of bounds, since they tend to over-reject the null hypothesis of a unit root, even asymptotically. So far, very little work has been undertaken to develop unit root tests which can be applied to bounded time series. In this paper we address this gap in the literature by proposing unit root tests which are valid in the presence of bounds. We present new augmented Dickey–Fuller type tests as well as new versions of the modified ‘M’ tests developed by Ng and Perron [Ng, S., Perron, P., 2001. LAG length selection and the construction of unit root tests with good size and power. Econometrica 69, 1519–1554] and demonstrate how these tests, combined with a simulation-based method to retrieve the relevant critical values, make it possible to control size asymptotically. A Monte Carlo study suggests that the proposed tests perform well in finite samples. Moreover, the tests outperform the Phillips–Perron type tests originally proposed in Cavaliere [Cavaliere, G., 2005. Limited time series with a unit root. Econometric Theory 21, 907–945]. An illustrative application to U.S. interest rate data is provided