In many classification and prediction problems it is known that the response variable depends on certain explanatory variables. Monotone neural networks can be used as powerful tools to build monotone models with better accuracy and lower variance compared to ordinary nonmonotone models. Monotonicity is usually obtained by putting constraints on the parameters of the network. In this paper, we will clarify some of the theoretical results on monotone neural networks with positive weights, issues that are sometimes misunderstood in the neural network literature. Furthermore, we will generalize some of the results obtained by Sill for the so-called min-max networks to the case of partially monotone problems. The method is illustrated in practical case studies.

No abstract

No abstract

No theory of structural exchange rate determination has yet been found that performs well in prediction experiments. Only very seldom has the simple random walk model been significantly outperformed. Referring to three, sometimes highly nonlinear, monetary and nonmonetary structural exchange rate models, a feedforward artificial neural network specification is investigated to determine whether it improves the prediction performance of structural and random walk exchange rate models. A new test for univariate nonlinear cointegration is also derived. Important nonlinearities are not detected for monthly data of US dollar rates in Deutsche marks, Dutch guilders, British pounds and Japanese yens.