Size distributions reconsidered
Size distributions reconsidered
We consider tests of the hypothesis that the tail of size distributions decays faster than any power function. These are based on a single parameter that emerges from the Fisher-Tippett limit theorem, and discriminate between leading laws considered in the literature without requiring fully parametric models/specifications. We study the pro- posed tests taking into account the higher order regular variation of the size distribution that can lead to catastrophic distortions. The theoretical bias corrections re-align successfully nominal and empirical test behavior, and inform a sensitivity analysis for practical work. The methods are used in an examination of the size distribution of cities and firms.
size distribution, tail behavior, power law, extreme value index
695-710
Schluter, Christian
ae043254-4cc4-48aa-abad-56a36554de2b
Trede, Mark
7233d600-13a2-4c24-ae9d-16aed9bfca30
3 July 2019
Schluter, Christian
ae043254-4cc4-48aa-abad-56a36554de2b
Trede, Mark
7233d600-13a2-4c24-ae9d-16aed9bfca30
Abstract
We consider tests of the hypothesis that the tail of size distributions decays faster than any power function. These are based on a single parameter that emerges from the Fisher-Tippett limit theorem, and discriminate between leading laws considered in the literature without requiring fully parametric models/specifications. We study the pro- posed tests taking into account the higher order regular variation of the size distribution that can lead to catastrophic distortions. The theoretical bias corrections re-align successfully nominal and empirical test behavior, and inform a sensitivity analysis for practical work. The methods are used in an examination of the size distribution of cities and firms.
Text
16_01_2018_Size distr
- Accepted Manuscript
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Accepted/In Press date: 27 November 2017
e-pub ahead of print date: 8 February 2018
Published date: 3 July 2019
Keywords:
size distribution, tail behavior, power law, extreme value index
Identifiers
Local EPrints ID: 416995
URI: http://eprints.soton.ac.uk/id/eprint/416995
ISSN: 0747-4938
PURE UUID: 0b070a1b-66eb-445c-8ee4-d8d5caa6860d
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Date deposited: 16 Jan 2018 17:30
Last modified: 16 Mar 2024 06:05
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Author:
Mark Trede
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