Chapter 3 REFINEMENTS OF THE LIMIT THEOREMS FOR NORMAL CONVERGENCE
§ 1 . Introduction In this chapter we consider a sequence X 1 , X2 , . . . of independent, identically distributed random variables belonging to the domain of attraction of the normal law. As shown in § 2 .6, the X; necessarily have a finite variance a 2 .
Stochastic volatility (SV) is the main concept used in the fields of financial
economics and mathematical finance to deal with time-varying volatility in
financial markets. In this book I bring together some of the main papers which
have influenced the field of the econometrics of stochastic volatility with the hope
that this will allow students and scholars to place this literature in a wider
Next, we can modify our model to account for different ﬁrm sizes. For notational convenience and
ease of exposition, we have used a continuum model. A ﬁrm hires a unit mass of consumers. The size of
the ﬁrm then becomes a normalization and hence has no bearing on the dynamics and steady-state
properties. In practice, ﬁrms hire a ﬁnite number of workers, and the law of large number becomes a
poor approximation when the ﬁrm is small. Even when a small ﬁrm draws from the same work force as
any other ﬁrm, the variance of workers’ health-care cost may be larger.