Hi all,

I'm trying to solve a question from the 'Wooldridge - introductory econometrics' book (4th edition).

In question (12,10) we are asked to estimate the static Philips curve model by iterative Prais-Winsten.

My question is: How can I do this is Eviews??

What I tried is:

ls inf c unem (where inf and unem are the variables of interest)

genr uhat=resid

ls uhat c uhat(-1)

this gives me the rhohat, which is 0.572969.

Now I try to do a Prais-Winsten transformation;

genr infnew=(1-0.572969^2)^(1/2)*inf

genr unemnew=(1-0.572969^2)^(1/2)*unem

and run a OLS on the transformed variables.

when regressing the new residuals on residuals-1 the rho is not what it should be.

I attached the workfile. The prais-winsten rho the book finds is 0.781, I can only find 0.572969

Can anyone help me with this?

Thanks in advance