Abstract
Random field regression models provide an extremely flexible way to investigate nonlinearity in economic data. This article introduces a new approach to interpreting such models, which may allow for improved inference about the possible parametric specification of nonlinearity.
Acknowledgement
The authors are grateful to a referee for helpful comments. The views expressed in this article do not necessarily reflect those of the European Central Bank or its members.
Notes
1 Notable exceptions include Hamilton (Citation2003) and Kim et al. (Citation2005).
2 For an excellent survey of issues relating to PPP, see Taylor and Taylor (Citation2004) and Taylor (Citation2006).