Modeling the United States Economy in MATLAB

This video explains how to model the U.S. economy in MATLAB^® using a Vector Error-Correction (VEC) model. Using the Econometric Modeler App, you can use historical economic data to generate forecasts and interpret long-run economic relationships. The Johansen test is used to determine the cointegration rank, comparing alternative trend specifications and confirming the final model choice with a likelihood ratio test. After establishing the correct model, the video shows how to forecast GDP using the app’s visualization tools and analyze the effects of economic shocks.