Testing Regression Monotonicity in Econometric Models

Understand

Monotonicity is a key qualitative prediction of a wide array of economic models derived via robust comparative statics.

• It is therefore important to design effective and practical econometric methods for testing this prediction in empirical analysis.
• This paper develops a general nonparametric framework for testing monotonicity of a regression function.
• Using this framework, a broad class of new tests is introduced, which gives an empirical researcher a lot of flexibility to incorporate ex ante information she might have.