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TESTING March 12, 2026

Variance Estimation with Dependence and Heterogeneous Means

Authors

Luther Yap

Abstract

This paper considers the problem of estimating the variance of a sum of a triangular array of random vectors with heterogeneous means. When random vectors exhibit two-way cluster dependence or weak dependence, standard variance estimators designed under homogeneous means can underestimate the true variance, which results in subsequent tests being oversized. To restore validity, this paper proposes a simple conservative variance estimator robust to heterogeneous means and shows its asymptotic validity.

Metadata

arXiv ID: 2603.11497
Provider: ARXIV
Primary Category: econ.EM
Published: 2026-03-12
Fetched: 2026-03-13 06:02

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Raw Data (Debug)
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