Units of measurement and the inverse hyperbolic sine transformation
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Units of measurement and the inverse hyperbolic sine transformation. / Aihounton, Dossou Ghislain Boris; Henningsen, Arne.
I: The Econometrics Journal, Bind 24, Nr. 2, 2021, s. 334–351.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Units of measurement and the inverse hyperbolic sine transformation
AU - Aihounton, Dossou Ghislain Boris
AU - Henningsen, Arne
PY - 2021
Y1 - 2021
N2 - The inverse hyperbolic sine (IHS) transformation is frequently applied in econometric studies to transform right-skewed variables that include zero or negative values. We show that regression results can heavily depend on the units of measurement of IHS-transformed variables. Hence, arbitrary choices regarding the units of measurement for these variables can have a considerable effect on recommendations for policies or business decisions. In order to address this problem, we suggest a procedure for choosing units of measurement for IHS-transformed variables. A Monte Carlo simulation assesses this procedure under various scenarios, and an empirical illustration shows the relevance and applicability of our suggested procedure.
AB - The inverse hyperbolic sine (IHS) transformation is frequently applied in econometric studies to transform right-skewed variables that include zero or negative values. We show that regression results can heavily depend on the units of measurement of IHS-transformed variables. Hence, arbitrary choices regarding the units of measurement for these variables can have a considerable effect on recommendations for policies or business decisions. In order to address this problem, we suggest a procedure for choosing units of measurement for IHS-transformed variables. A Monte Carlo simulation assesses this procedure under various scenarios, and an empirical illustration shows the relevance and applicability of our suggested procedure.
U2 - 10.1093/ectj/utaa032
DO - 10.1093/ectj/utaa032
M3 - Journal article
VL - 24
SP - 334
EP - 351
JO - Econometrics Journal
JF - Econometrics Journal
SN - 1368-4221
IS - 2
ER -
ID: 253652681