Forecasting from a Regression

[gtoledo89]

Dear EViews Team,

I use EViews 8

I have been attempting to forecast commodity Prices based off of exchange rate0 movements using this formula:
∆cpt+1=β0+β1∆st+ε
where ∆cpt+1= change in commodity price at time t+1, the first beta is a constant and the second beta is the coefficient and is multiplied by ∆st = the change in currency at time t with ε being the error term.
I have been inputing into the estimate equation field:
log(cp) c log(curr(-1)) log(curr)
and have gotten strange results. I figure that I must be doing something wrong in terms of my inputs into the estimate equation field and was hoping that you may have a suggestion on what can fix the issue.

Thank you

[startz]

Dear EViews Team,

I use EViews 8

I have been attempting to forecast commodity Prices based off of exchange rate0 movements using this formula:
∆cpt+1=β0+β1∆st+ε
where ∆cpt+1= change in commodity price at time t+1, the two betas are constants, and ∆st = the change in currency at time t with ε being the error term.
I have been inputing into the estimate equation field:
log(cp) c log(curr(-1)) log(curr)
and have gotten strange results. I figure that I must be doing something wrong in terms of my inputs into the estimate equation field and was hoping that you may have a suggestion on what can fix the issue.

Thank you

Your equation specifies the change in cp, but your EViews command specifies the log. Perhaps you want

Code: Select all

dlog(cp) c log(curr(-1)) log(curr)

[gtoledo89]

Would you think then that I should also include the dlog for the currency as well as the equation also specifies the change in the currency?
dlog(cp) c log(curr(-1)) dlog(curr)

[startz]

You can, but it won't make any difference as you already have current and lagged log currency.

[gtoledo89]

I apologize for the incompetence, I have recently begun using the program. I do find a difference when I Input a dlog or just a log for the currency. Would the equation begin written as so make a difference?:
dlog(cp) c log(curr(-1))+dlog(curr)

Also, when I Input the equation, would the C coefficient be equivalent to my beta 0 and would the other coefficient be beta 1?

Thank you for your help, and once again I apologize for the simplicity of the questions.

[startz]

I apologize for the incompetence, I have recently begun using the program. I do find a difference when I Input a dlog or just a log for the currency. Would the equation begin written as so make a difference?:
dlog(cp) c log(curr(-1))+dlog(curr)

dlog(x) is defined to mean log(x) - log(x(-1))

Also, when I Input the equation, would the C coefficient be equivalent to my beta 0 and would the other coefficient be beta 1?

That's right.

[gtoledo89]

Thank you, that seems to have done the trick. The results are more representative of what I thought they should be.