interactive dummy variables in forecasting

[freddyg_7]

Hi
Trust all is well. If you put in interactive dummy variables in an equation like so:

Code: Select all

equation {%asset}_m.ls(cov="hac") dlog({%asset}) dlog({%asset}(-1))*@recode(vix>22,1,0) dlog(world_us)*@recode(vix>22,1,0) dlog(vix)*@recode(vix>22,1,0) c dlog({%asset}(-1))*@recode(vix<22,1,0) dlog(world_us)*@recode(vix<22,1,0) dlog(vix)*@recode(vix<22,1,0)

and assuming I have generated forecasts of "VIX". Will the model solver know to apply the conditions inherent in the dummy variables. That is vix>22 or vix<22 ?

Thanks in advance
fred

[EViews Gareth]

Yes.