Size distributions reconsidered
2019_ER.Rmd- C. Schluter and M. Trede (2019). “Size distributions reconsidered”. Econometric Reviews, 38(6).
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 proposed tests taking into account the higher order regular variation of the size distribution that can lead to catastrophic distortions. The theoretical bias corrections realign 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.
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@article{Schluter_Trede_2019,
author = {Christian Schluter and Mark Trede},
title = {Size distributions reconsidered},
journal = {Econometric Reviews},
volume = {38},
number = {6},
pages = {695--710},
year = {2019},
publisher = {Taylor \& Francis},
doi = {10.1080/07474938.2017.1417732},
url = {10.1080/07474938.2017.1417732}
}