A Consistent Nonparametric Test for Causality in Quantile



= -J2(Qθ -CT)

1 ʃ. ʃ.   1 (z -z A

=--1∑ ∑ ɪ κ z1-^ I

T(T -1) ⅛ ⅛ hm L h )

× {1( yt Qθ ( xt ) - Ct ) - Fyz ( Qθ ( xt ) - Cτzt )}{Fyz ( Qθ ( xs ) - C z, ) - θ} (A.22)

Denote S(g) ≡ ∂F[g] / g . By taking a Taylor expansion of Fyz (Qθ (xs ) - Cτ zs) around
Qθ(xs), we have

J2(Qθ)-J2(Qθ-Cτ)

1

τ(τ- 1)


ττ1(z

∑ ∑ _Lкzt

m

t=1 sth L


-zI

τs- I {1(yt (xt) - Ct) - Fyz((xt) - Ct | zt)}
h)

× (-Ct )S(Qθ (Xs ))

1τ

= Ct -∑ {1(yt Qθ(xt) - Ct ) -Fyz(Qθ(xt) - Ct)}S(Qθ(Xs)) f (Zt)
τ t=1

1τ

Ct VUtS(Qθ(x,))f,(zà.                                    (A.23)

τ t=1

where Qθ is between Qθ and Qθ - Cτ . Thus we have

EJ2(Qθ ) - J2(Qθ - Ct )

1τ

≤Λ Ct - ∑ Eufz (z■ )

τ t=1

1τ

≤ΛCt -∑ E {ut f z2(Zt)}
τ t=1

= O(Cτ(τhm)-1).                                                       (A.24)

where the first inequality holds due to Assumption (1)(v) and the last equality is derived by
using Lemma C.3(iii) of Li (1999) that is proved in the proof of Lemma A.4(i) of Fan and Li
(1996c).

Thus. we have

16



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