Contemporaneous threshold autoregressive models
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Contemporaneous threshold autoregressive models

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2003

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"This paper proposes a contemporaneous smooth transition threshold autoregressive model (C-STAR) as a modification of the smooth transition threshold autoregressive model surveyed in Ters̃virta (1998). Because it uses a forward-looking approach to weight the regimes, in contrast to the typical lagged threshold model, the C-STAR model is well-suited to forward-looking rational expectations applications, such as bond pricing. We present an application to the pricing of bonds under the Expectations Hypothesis with a C-STAR driving process for the short-term rate"--Federal Reserve Bank of St. Louis web site.

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