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Likelihood inference for discretely observed non-linear diffusions.

Abstract:
This paper is concerned with the Bayesian estimation of nonlinear stochastic differential equations when observations are discretely sampled. The estimation framework relies on the introduction of latent auxiliary data to complete the missing diffusion between each pair of measurements. Tuned Markov chain Monte Carlo (MCMC) methods based on the Metropolis-Hastings algorithm, in conjunction with the Euler-Maruyama discretization scheme, are used to sample the posterior distribution of the latent data and the model parameters. Techniques for computing the likelihood function, the marginal likelihood, and diagnostic measures (all based on the MCMC output) are developed. Examples using simulated and real data are presented and discussed in detail.
Publication status:
Published
Peer review status:
Peer reviewed

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Publisher copy:
10.1111/1468-0262.00226

Authors


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Institution:
University of Oxford
Role:
Author
More by this author
Institution:
University of Oxford
Role:
Author


More from this funder
Funding agency for:
Shephard, N
Grant:
R000238391
More from this funder
Funding agency for:
Shephard, N
Grant:
R000238391
More from this funder
Funding agency for:
Elerian, O


Publisher:
Econometric Society
Journal:
Econometrica More from this journal
Volume:
69
Issue:
4
Pages:
959 - 993
Publication date:
2001-01-01
DOI:
ISSN:
0012-9682


Language:
English
UUID:
uuid:32366322-5b0e-4f38-b18b-89c11fd44265
Local pid:
oai:economics.ouls.ox.ac.uk:13896
Deposit date:
2011-08-16

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