The Key Difference Between Threshold Autoregressive and Markov Switching Models

question 6

Multiple Choice

The key difference between threshold autoregressive and Markov switching models is that:

• A) The latter can be estimated using ordinary least squares while the latter is estimated using indirect least squares estimation technique
• B) Under the latter, the state variable is assumed to be known and observable, while it is latent under the former
• C) Under the former, the state variable is assumed to be known and observable, while it is latent under the latter
• D) None of the above

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Definitions:

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