1. 1 Ka-fu Wong University of Hong Kong EViews Commands that are useful for Assignment #2

2. 2 Download and open the Excel file containing the data We are going to use Canada-US real exchange rate as an example. Dated observations from 1970:01 to 2006:11

3. 3 Enter or read data in Eviews File > New > Workfile 3. Click OK. 1. Choose “Monthly”. 2. Specify 1970:01 and 2006:11

4. 4 Enter or read data in Eviews Choose Quick>Empty Group(Edit Series)

5. 5 Enter or read data in Eviews Key in data

6. 6 Enter or read data in Eviews Copy the data from Excel (B16:B458 together) to the Workfile Default series names

7. 7 Renaming the series First minimize the data sheet Highlight ser01 and right click mouse, and choose rename

8. 8 Rename the series ser01

9. 9 Check if the variable names has been changed

10. 10 Save data and results frequently to avoide loss of data File>SaveAs Enter rer1.wf1

11. 11 Plot a line graph of the data (against date) and call it Figure1

12. 12 Double click figure1 to see the plot

13. 13 Generate the variable TIME and its relatives TIME=1 for 1970m01 and 2 for 1970m02, etc.

14. 14 Generate the variable TIME and its relatives TIME2, TIME3, TIME4, TIME5

15. 15 Select sample from 1970m01 to 2000m12 for regression analysis (fitting the trend line)

16. 16 Fit a linear trend using Least Squares and put the result to Table1

17. 17 Double click table1 to see the regression result

18. 18 Fit Polynomial trend line of various degree (up to 5) using Least Squares and put the result to corresponding tables.

19. 19 Fitting an exponential trend and put result to Table6

20. 20 Plot (in-sample) residuals, fitted values and actual values, and put them in corresponding figures (FigureA?)

21. 21 Generate a new variable containing the historical values of rer from 1970:01 to 2000:12

22. 22 Specify the sample to create out-of-sample forecast

23. 23 Produce a forecast for the sample period 2001m01 to 2006m11 using the Table1 regression results

24. 24 Generate the upper bound and lower bound of 95% confidence interval.

25. 25 Continue to obtain forecast, and confidence bound for the forecast using other trend models.

26. 26 Change the sample to 1970m01 2006m11, for plotting actual value and forecast together

27. 27 Plot the historical values, forecast, confidence interval and the actual value during the forecasting period.

28. 28 Double click figureb1 to see the plot

29. 29 Fix the sample and compute the sqaured forecast errors based on different models.

30. 30 Fix the sample and compute the sqaured forecast errors based on different models. Create a vector “A” to save the mean squared errors. Save the mean squared errors to the vector

31. 31 Double click “A” to see the mean squared forecast errors from different models.

32. 32 Note limitation of EViews 4.1 student version There is a limit on how many variables we can create in student version. When I tried to run 6 regressions, and create the 6 forecast, 6 confidence bounds, 6 squared forecast errors all in one go, I got an error message “You have exceeded the data capacity of the Student Version.” I have to delete some variables before I could complete all the analysis I wanted to do.

33. 33 End