Hidden Markov chain filtering for a jump diffusion model

Date

2005

Authors

Wu, P.
Elliott, R.

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Stochastic Analysis and Applications, 2005; 23(1):153-163

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Wu, P. ; Elliott, R. J.

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Abstract

In this paper, we derive the finite-dimensional recursive filters for a jump diffusion model with a drift parameter that follows hidden Markov chains. These finite-dimensional filters can be used with the expectation maximization (EM) algorithm to yield maximum likelihood estimates of the parameters of the model and the jump intensity rate.

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Copyright © Taylor & Francis, Inc.

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