Which object to use - MODEL or SYSTEM?

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Which object to use - MODEL or SYSTEM?

Postby Namazbai » Sat Mar 26, 2016 1:29 pm

Hi, dear colleagues and experts! Would you be so kind as to clarify in which situations should I use MODEL object instead SYSTEM? The problem is I am trying to build model of my country's economy, which consists of several equations (for monetary, fiscal, real, and external sectors) and identities (national accounts' identity, budget restrictions, etc) and I use MODEL object. However, my advisor insists on using SYSTEM object. I need to understand when it is appropriate to use MODEL. As far as I understand, the difference is that SYSTEM object estimates equations simultaneously, while MODEL object gets already estimated equations and tries to solve this system as if it were a system of linear equations. So, could you please suggest me how to distinguish situations when it is right to use MODEL object instead SYSTEM, and vice versa? Thanks a lot!

EViews Gareth
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Re: Which object to use - MODEL or SYSTEM?

Postby EViews Gareth » Sat Mar 26, 2016 2:12 pm

System is for estimating, model is for forecasting.

Or, more technically, the System will estimate coefficients given the values of the variables, the Model will estimate the values of the variables given the coefficients.
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