We use panel probit models with unobserved heterogeneity, state dependence and serially correlated errors in order to analyse the determinants and the dynamics of current account reversals for a panel of developing and emerging countries. The likelihood-based inference of these models requires...

We study the asymptotic behaviour of encompassing statistics in general regression models. The theory for testing one parametric model against another parametric model is now well known, but the comparison of two non-parametric models, or 'crossed' situations where a parametric model is tested...