Equations, Formulas, and Models

RATS provides three types of objects (equations, formulas, and models) for managing linear and non-linear equations and groups of equations. We describe these briefly below.

See Equation, Formula, and Model Instructions for a list of the key instructions used to work with these objects. Also see Equation and Regression List Functions and Model Functions for lists of the many functions available for working with these objects.

Equations

In RATS, an equation is an object describing a linear relationship. They are used for forecasting, for vector autoregressions and for estimation of systems of equations using SUR.

You can create equations using an EQUATION instruction, the Equation/FRML Definition Wizard, or by using the DEFINE option on an Estimation Instruction.

You can make several types of modifications to a previously defined equation through the MODIFY and VREPLACE instructions.

Formulas

Formulas (also called FRMLs) are similar to equations, but are descriptions of (possibly) non-linear relationships. These store a SET style function together with the dependent variable.

You can create a formula using the instruction FRML, the Equation/FRML Definition Wizard, or by using the FRML option on an estimation instruction. You can also convert an existing equation to a formula by using the EQUATION option of FRML.

Models

A model is a group of equations and/or formulas. Models provide a convenient way to estimate, forecast, and analyze systems of equations.

A model can contain a mix of linear equations and non-linear formulas, but certain operations (such as the IMPULSE instruction) will only work with models that contain only linear equations.

You can create a model from an existing set of equations and formulas using the GROUP instruction. You can also create a model using the MODEL option on a SYSTEM instruction.