Modelling Category Inflation with Multiple Inflation Processes: Estimation, Specification and Testing
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This is the peer reviewed version of the following article: Brown, S. and Harris, M.N. and Spencer, C. 2020. Modelling Category Inflation with Multiple Inflation Processes: Estimation, Specification and Testing. Oxford Bulletin of Economics and Statistics. 82: pp. 1342-1361, which has been published in final form at https://doi.org/10.1111/obes.12366. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.
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© 2020 The Department of Economics, University of Oxford and John Wiley & Sons Ltd Zero-inflated ordered probit (ZIOP) and middle-inflated ordered probit (MIOP) models are finding increasing favour in the discrete choice literature. We propose generalizations to these models – which collapse to their ZIOP/MIOP counterparts under a set of simple parameter restrictions – with respect to the inflation process. These generalizations form the basis of a new specification test of the inflation process in ZIOP and MIOP models. Support for our generalization framework is principally demonstrated by revisiting a key ZIOP application from the economics literature, and reinforced by the reassessment of an important MIOP application from political science. Our specification test supports the generalized models over the original ZIOP/MIOP ones, suggesting an important role for it in modelling zero- and middle-inflation processes.