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The Anderson-Moore Algorithm AIM index |
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Model preprocessors take MDLEZ files (*.mdl) as arguments. A MDLEZ file describes a model using eqations, rather than matrices. There are five fields in a MDLEZ file. Below is a description of each:
MODEL>
Provides a name for the model. This does not affect the AIM calculations.
ENDOG>
Provides names of the endogenous variables. In the AIM formulation, modellers must completely describe the long run behavior of the system. As a result, all variables are endogenous. "Exogenous" variables must have, at least, a simple forecasting equation.
EQUATION>
Provides a name for the equations. This does not affect the AIM calculations.
EQTYPE>
Specifies the type of equation. This does not affect the AIM calculations. The keyword STOCH indicates the equation has a stochastic error term. The keyword IMPOSED indicates the equation has no error term.
EQ>
Provides the model equation.
Example 1
Consider the following model, which describes the value of a firm. V is the value of the firm. D is the dividend. r is the interest rate. Delta is the rate of growth (here, negative) of the firm's dividends.
A MDLEZ file which characterizes the model.
Example 2
A MDLEZ file which characterizes the model.