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# PS9.9, for Application Section 9.7   
open data9-3
genr d74 = period > 1974
# create dummy variables for four periods 
genr d79 = period > 1979
genr d83 = period > 1983.2
# generate log variables   
genr kwh = reskwh/nocust
genr lkwh = ln(kwh)
genr lprice = ln(100*price/cpi)
genr ly = ln(100*incm/(cpi*pop))
# check correlations for possible sign of multicollinearity   
corr ly lprice cdd hdd  
# estimate basic model by ols   
ols lkwh const ly lprice cdd hdd  
# save residuals   
genr ut = $uhat
# generate forecast after correcting for log model bias 
genr f1 = exp(lkwh-ut+($ess/($df*2)))
# forecast error 
genr abserr1 = abs(kwh - f1)
# generate lagged values for four periods   
lags ut  
# suppress first four observations   
smpl 1973.2 1993.4
# estimate auxiliary regression   
ols ut const ut_1 ut_2 ut_3 ut_4 ly lprice cdd hdd  
# compute nRsquared statistic   
genr LM = $nrsq
# compute pvalue   
pvalue X 4 LM
# reset sample range back to beginning   
smpl 1972.2 1993.4
help ar
# estimate AR(4) model by generalized CORC   
ar 1 2 3 4 ; lkwh const ly lprice cdd hdd  
# again obtain forecasts and errors 
genr f2 = exp(lkwh-$uhat+($ess/($df*2)))
genr abserr2 = abs(kwh - f2)
# generate interaction terms to test for structural change   
genr lyd74=ly*d74
genr lyd79=ly*d79
genr lyd83=ly*d83
genr lprd74=lprice*d74
genr lprd79=lprice*d79
genr lprd83=lprice*d83
genr d74cdd=d74*cdd
genr d79cdd=d79*cdd
genr d83cdd=d83*cdd
genr d74hdd=d74*hdd
genr d79hdd=d79*hdd
genr d83hdd=d83*hdd
genr lprcdd=lprice*cdd
genr lprhdd=lprice*hdd
list
# estimate full model by ols and note that there is no autocorrelation   
ols lkwh const d74 d79 d83 ly lyd74 lyd79 lyd83 lprice lprd74 lprd79 \
 lprd83 cdd d74cdd d79cdd d83cdd lprcdd hdd d74hdd d79hdd d83hdd \
 lprhdd  
# omit variable with highest pvalue, one at a time   
omit d83  
omit d74  
omit d79cdd  
omit d79hdd  
omit ly  
omit d74cdd  
omit d83cdd  
omit lprhdd  
# generate final model forecasts and errors* 
genr f3 = exp(lkwh-$uhat+($ess/($df*2)))
genr abserr3 = abs(kwh - f3)
# exclude four initial observations and compute percent errors, mean 
# absolute percent error, and mean squared error 
smpl 1973.2 1993.4
genr pcterr1 = 100*abserr1/kwh
genr pcterr2 = 100*abserr2/kwh
genr pcterr3 = 100*abserr3/kwh
genr mape1=mean(pcterr1)
genr mape2=mean(pcterr2)
genr mape3=mean(pcterr3)
genr mse1=mean(pcterr1*pcterr1)
genr mse2=mean(pcterr2*pcterr2)
genr mse3=mean(pcterr3*pcterr3)
print -o pcterr1 pcterr2 pcterr3 
print mape1 mape2 mape3 mse1 mse2 mse3