How to a certain country as the domionant unit
The GVAR Toolbox 1.1 is designed for the purpose of GVAR modelling.
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Hi,
I am estimating a GVAR model with several countries. I want create a dominant unit where USA will be the dominant unit. How to do it with the GVAR toolbox? In the gvar.xls file under 'dominant unit' tab there is no place to select a certain country as dominant unit. Am I making any mistakes? Any help will be highly appriciated.
Thank you.
Best,
Hello
The dominant unit can only be one and contains global variables. If you want the US country to act as a dominant unit you simply need to include its variables as global variables in modelling process, which means including the US variables under the heading of the global variables in the main sheet of the interface file (and of course enabling the dominant unit function in the same sheet). Then when you come to the specification of the individual country models make sure that for each country you obey the restriction that (foreign variables+global variables)<=8. See the user guide for further details.
Thank you very much for your useful reply. I have another question which I hope you can answer. How can I include dummy variable using the toolbox? I want include a dummy variable in my model which takes the value 1 for periods after the financial crisis and 0 otherwise. If I just include it as global variable, will it work?
Thank you.
Unfortunately this is not possible without further coding. Any dummy variable would need to be included in the country specific VECMX models directly, in the same way they would enter any standard VECM model, and not included in the toolbox as a global variable.