EncompassTest (version 0.22)
Direct Multi-Step Forecast Based Comparison of Nested Models via
an Encompassing Test
Description
The encompassing test is developed based on multi-step-ahead predictions of two nested models as in Pitarakis, J. (2023) . The statistics are standardised to a normal distribution, and the null hypothesis is that the larger model contains no additional useful information. P-values will be provided in the output.