Estimating a model with change in the variables!

[Trisha2013]

Hi

I am struggling to estimate the following model using Eviews: △logM_t=β_1△logY_t + β_2△logR_t + β_3△logM_(t-1 + µ_t

where △logX_t=logX_t - logX_(t-1)

My experience with eviews so far has only been concerned with estimating "simple" model. Hence the introduction of the change in the model seems to be challenging for me. So my questions are:

1) how do you enter the change (△) in the estimated equation?

2) If I have two variables that are positively correlated (let's say variables M_t and R_t) what could be the issues when I estimating my model?

Thanking you in advance

Trisha

[startz]

You can enter Delta X as either D(X) or X-X(-1).

[trubador]

2) If I have two variables that are positively correlated (let's say variables M_t and R_t) what could be the issues when I estimating my model?

Please search the forum for discussions on multicollinearity issue. A recent one, for instance, can be found here: http://forums.eviews.com/viewtopic.php?f=18&t=7903

[Trisha2013]

Thanks so much, it works well

regards,

Trisha