Forecast
Period versus Prediction Period
We will use the phrase "forecast period" to refer to the actual
forecast
period in the base dataset, currently 2004:1-2007:4. You may, however,
deal with any
period within the overall 1952:1-2007:4 period, and we will use the phrase
"prediction period" to refer to the period you have chosen. The
only restriction
is that if you are going to solve the model, the prediction period cannot
begin earlier
than 1954:1.
The US Model Datasets
Everything about the model is stored in a single dataset:
- values on all the endogenous and exogenous variables from 1952:1
through 2007:4,
- specification information, and
- coefficient estimates.
The dataset for the February 5, 2004, update of the model is called BASE
with a password
of BASE. You will name and create your own dataset, using BASE as a
starting point. Say
you call your dataset NEW and give it the password of NEW. When you first
start, NEW and
BASE are exactly the same, and then NEW gets modified as you make changes
(change
exogenous variables, coefficients, etc.). Once you are done making
changes, you tell the
program to solve the model. The program solves the model, and after this
solution, the
values of the endogenous variables in NEW are the predicted values. You
can examine (i.e.,
write to the screen, print to a printer, or download to a file) the
values in BASE and in
any datasets you create.
In many cases one is interested in how the values of the endogenous
variables in NEW
compare to the original values in BASE. Say that you changed federal
government purchases
of goods (COG) for the forecast period and are interested in how this
change affected real
GDP (GDPR). You can simply tell the program that you want to compare GDPR
in NEW versus
BASE, and it will show you the two sets of values and the differences.
(Once you do this a
few times you will get
the hang of it.)
WARNING: A comparison done this way only works if you
take the beginning
of your prediction period to be no earlier than the beginning of the
forecast period in
BASE. See Section 2.6 in Chapter 2 of
The US Model Workbook
for what needs to be done for
comparisons within a period for which historical data exist. This is
important: Do not
take your prediction period to begin earlier than the forecast period
until you have read
Section 2.6.
The program is flexible as to what you take as your base dataset.
Although the first time
you start the base dataset is BASE, after you have created new ones, you
can use any of
these as your base. For example, if you created NEW and now want to makes
further changes
and create NEW1, you simply tell the program that you want NEW as your
base dataset. Once
you have created NEW1, you can either compare the values in NEW1 with
those in NEW or the
values in NEW1 with those in BASE. You do this by simply telling the
program which two
datasets to use for the comparison.
If you make changes to your dataset and do not ask the program to solve
it (which you are
allowed to do), the values of the endogenous variables in the dataset are
not consistent
with your changes because they are not the solution values. Make sure you
remember whether
your dataset has been solved. As a general rule, you might always solve
your datasets
immediately after you have made your changes.
Units of the Variables
Although the flow variables in the US model are at quarterly rates, for
most
purposes it is useful to work with variables at annual rates. For the
most part you will
work with variables at annual rates: the program lists the variables at
annual rates and
your changes are taken to be at annual rates. The only time you need care
about quarterly
rates is if you are downloading the data to your computer for estimation
purposes, since
for estimation purposes the variables should be at quarterly rates. There
is an option in
the program to download the data at quarterly rates.
Notation for Quarters
When you type a quarter, such as the fourth quarter of 1996, you type
19964. In the
documentation, however, the notation 1996:4 is sometimes used. You should
not type the
colon when entering the quarter you want.
Solution Errors
If you make wild changes to the exogenous variables or coefficients, the
model may
not solve. When the model does not solve, you will get a solution error
message, and the
existing values of the endogenous variables in your dataset will not be
changed. (Your
dataset will still be inconsistent in the sense discussed above.) You
need to be less wild
and try again. As a general rule, as discussed in Chapter 2 of
The US Model Workbook, you
should not try to push the economy into extreme areas. Macroeconometric
models are not
likely to be reliable when variable values are pushed far beyond their
historical ranges.
Dataset Names and Storage
The dataset names cannot be longer than EIGHT characters. A common mistake
is to use more than eight characters. The datasets are stored on the
site's hard drive for about three months. If you want to continue to use
a dataset older than three months, simply copy it to a new named dataset,
and the latter will be treated as a newly created dataset.
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