MFMSA_BIH Model Build Process Overview
This detailed process outlines the steps involved in preparing, building, and debugging a back-end programming model known as MFMSA_BIH. It covers activities such as data preparation, model building, equation estimation, assumption making, model compilation, and front-end adjustment. The iterative process ensures data and economic consistency while considering coefficients and simulation properties. The model is constructed using historical data, exogenous variables, and factors like trade, tourism, remittances, and commodity prices, among others. EViews software is utilized for model consistency and solving. Global parameters, such as sample periods and solvers, are set before executing a sequence of EViews programs automatically.
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MFMSA_BIH MODEL BUILD BACK-END PROGRAMMING
MFMSA_BIH MODEL BUILD PROCESS Prepare Data Build Model Debug Model Write and estimate equations over historical data Make assumptions for exogenous/global variables Make assumptions on add-factors Compile and solve model Adjust front-end to be consistent with Eviews model Data consistency: historical data consistent with model equations/identity Coefficients make sense: trade-off between data fitting vs. economic/simulatio n properties Long-run properties observed Simulation properties observed Collect relevant data Make necessary transformations to ensure accounting and economic consistency Iterative Process!
MFMSA_BIH MODEL BUILD PROCESS: 00_master.prg Prepare Data Build Model Debug Model Collect relevant data 01_read_data.prg Make necessary transformations to ensure accounting and economic consistency 02_create_data.prg 02a_create_potl.prg Write and estimate equations over historical data 03_equations.prg Make assumptions for exogenous/global variables Make assumptions on add-factors 04_extend_exog.prg Compile and solve model 05_solve_model.prg Adjust front-end to be consistent with Eviews model 06_interface.prg Data consistency: historical data consistent with model equations/identity Coefficients make sense: trade-off between data fitting vs. economic/simulation properties Long-run properties observed 07_convergence.prg Simulation properties observed 08_IRF.prg Iterative Process!
MFMSA_BIH MODEL BUILD PROCESS: DATA Model\Data\BIHdataforupdate.xlsx Time series data BIHdataforupdate : BIH s macro, fiscal, external, monetary data (history) global : trade, tourism- and remittance-sending countries imports, exchange rate, inflation, and nominal GDP (historical + forecast) commodities : World Bank s commodity price (history + forecast) hnp_pop_proj : World Bank s population (history + forecast) Fixed parameters remittance_matrix : top 10 remittance-sending countries and their weights trade_matrix : top 10 importing partners and their weights tourism_matrix: top 10 tourist-sending partners and their weights for Nepal Note: Commodity (imports & exports) matrices (with the raw data and calculations) are in the Commodity_Matrix_Update subfolder.
MFMSA_BIH MODEL BUILD PROCESS: EVIEWS Set global parameters: sample periods, solver, diagnostic triggers Sequence of Eviews program to execute automatically 00_master. prg Read country-specific and global data from BIHdataforupdate.xlsx 01_read_da ta.prg 02_create_data.prg: transform, calculate, balance country and global data 02a_create_potl.prg: estimate capital stock, TFP, potential output 02_*.prg Estimate behavioral equations; reinforce identities and quasi-identities using historical data 03_equatio ns.prg Provide forecast for global, exogenous variables and structural parameters 04_extend_ exog.prg Compile and solve model over history; generate add-factors Extend add-factor into forecast period solve out of sample 05_solve_m odel.prg Set interface page setting options 06_interfac e.prg 07_convergence.prg: graph long-run and ECM dynamics 08_IRF: impulse response simulations 07_converg ence.prg; 08_IRF.prg
MFMSA_BIH MODEL BUILD PROCESS GUIDE Workshop homepage:https://isimulate.worldbank.org/mfm_admin/Mission/BIH Model layout (theory + equations): 04_ModelLayout_BIH.pptx Model build data files and programs (Eviews): Build folder ; most important Master input data file: BIHdataforupdate.xlsx Master Eviews program: 00_master.prg Reading MFMSA mnemonics and equations: 05_ReadingMFMSA.pptx Changing Excel front-end: PPT: 11_MakingChangesFrontEnd.pptx Eviews program: 06_interface.prg
MFMSA_BIH MODEL BUILD PROCESS GUIDE: UPDATE EXAMPLE 1 Change history end date to 2022 Questions to consider before proceeding: Is the change in history or forecast? Where can we put in this change (macroeconomic account, file .)? Does the new value have the intended unit and scale? Equations and identities involving this this variable in our model? Expected change and adjustment?
MFMSA_BIH MODEL BUILD PROCESS GUIDE: UPDATE EXAMPLE 2 Adjust an identity: remove Revenue Sharing between Provincial and Local under Provincial Account Questions to consider before proceeding: Is the change in history or forecast? Where can we put in this change (macroeconomic account, file .)? Does the new value have the intended unit and scale? Equations and identities involving this this variable in our model? Expected change and adjustment?
MFMSA_BIH MODEL BUILD PROCESS GUIDE: UPDATE EXAMPLE 3 Adjust an identity: adjust income revenues to just a fixed share of GDP at Factor Cost Questions to consider before proceeding: Is the change in history or forecast? Where can we put in this change (macroeconomic account, file .)? Does the new value have the intended unit and scale? Equations and identities involving this this variable in our model? Expected change and adjustment?
MFMSA_BIH MODEL BUILD PROCESS GUIDE: UPDATE EXAMPLE 4 ADD TFP, CAPITAL STOCK, AND EMPLOYMENT AS CONTRIBUTION TO GROWTH OF POTENTIAL OUTPUT IN REPORTS TAB Tips: (1) Cobb-Douglas Production functional form for Potential Output ??= ??? ?? ?? 1 (2) Growth decomposition in log form ??= ??? + ? ? + 1 ? ?? 1 1 ?
