For many statistical modeling packages, there is no built-in (or Add-in) facility for solving RE models. In contrast, a few packages (including EViews and Stata) have Add-ins (or User Objects) for solving RE models. One of these packages (EViews) has an Add-in (or User Object) for solving the FT procedure, and EViews has a built-in (or Add-in) for solving E-Newton. Now that E-Newton and E-QNewton are available, EViews is the only major package with built-in (or Add-in) facilities for solving both procedures.4
In this paper, I provide a brief overview of the RE models that have been solved by the E-Newton and E-QNewton algorithms. I also describe the Student-version lite that is available for students. For the EViews command, menus, and objects, see http://www.eviews.com/addins .
The following sections describe a RE model for the adjustment of a real economy to a new equilibrium. The real economy is described by 10 sector variables, such as industrial production and personal income. Variables are indexed by month. The model contains 2 variables for household income, because the model was built to mimic the US Federal Reserve Board FRB/US model. The model also includes 2 variables that are treated as exogenous, called money growth and labor market tightness. Only the RE terms of sector variables are altered by model adjustments. The EViews Add-in Object and User Object infrastructures are used to implement these changes. A version of the model without these features is also described.
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One of the drawbacks to this approach was that we needed to recompile every time we made even a small change to the code. This slowed everything else we were doing down and because we couldn't always have someone waiting for the application to finish building. 827ec27edc