encompassing

Grayham E. Mizon
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

The concept of encompassing is defined and the role that it and congruence have in econometric modelling is discussed. Empirically, more than one model can appear to be congruent, but that which encompasses its rivals is dominant and will encompass all models nested within it and accurately predict the mis-specifications of non-congruent models. These results are consistent with a general-to-specific modelling strategy being successful in practice. Alternative forms and applications of encompassing tests are discussed.
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How to cite this article

Mizon, Grayham E. "encompassing." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 24 October 2017 <http://www.dictionaryofeconomics.com/article?id=pde2008_E000243> doi:10.1057/9780230226203.0470

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