Modelling volatility cycles: the MF2-GARCH model (replication data)

DOI

We propose a novel multiplicative factor multi-frequency GARCH (MF2-GARCH) model, which exploits the empirical fact that the daily standardized forecast errors of one-component GARCH models are predictable by a moving average of past standardized forecast errors. In contrast to other multiplicative component GARCH models, the MF2-GARCH features stationary returns, and long-term volatility forecasts are mean-reverting. When applied to the S&P 500, the new component model significantly outperforms the one-component GJR-GARCH, the GARCH-MIDAS-RV, and the log-HAR model in long-term out-of-sample forecasting. We illustrate the MF2-GARCH's scalability by applying the new model to more than 2,100 individual stocks in the Volatility Lab at NYU Stern.

Identifier
DOI https://doi.org/10.15456/jae.2025013.1232487362
Metadata Access https://www.da-ra.de/oaip/oai?verb=GetRecord&metadataPrefix=oai_dc&identifier=oai:oai.da-ra.de:781939
Provenance
Creator Conrad, Christian; Engle, Robert F
Publisher ZBW - Leibniz Informationszentrum Wirtschaft
Publication Year 2025
Rights Creative Commons Attribution 4.0 (CC-BY); Download
OpenAccess true
Contact ZBW - Leibniz Informationszentrum Wirtschaft
Representation
Language English
Resource Type Collection
Discipline Economics