Thank you Prof for your swift response. However, I couldn't still decode your explanation and I will describe the exact situation here so that clarity can be made.

I want to estimate a five-variable SVECs model with;

Y = Output

T = Tax

R = Interest rate

G = Government expenditure

P = Price

I assumed three theoretical co-integrating vectors;

Y = beta11*G + beta12*P (stabilization rule)

T = beta21*G (solvency)

R = beta31*P (fisher relation)

I want to however assign the three transitory shocks to T, G, & R respectively; does this not violate the listing the transitory shocks last in the Gretl convention? Also, there is need for one additional LR restriction and three SR restrictions.

I want to know how to carried this out fully on the Gretl using the SVECs gui without much emphasize on using the script (although I can manipulate it with a proper direction).

This is what has been be given a sleepless night. Please, I need to be cleared.

Thanks

On Thu, 23 Apr 2020 at 16:50, Sven Schreiber <svetosch@gmx.net> wrote:

Am 23.04.2020 um 15:31 schrieb Olasehinde Timmy:

> I am finding it difficult to use the additional long-run restriction in
> the SVEC interface. For instance, a four-variable VEC model with one
> cointegrating vector requires additional 3 long-run restrictions with
> the 3 linear independent shocks to exactly identified the system.

To avoid misunderstandings: Do you absolutely want to avoid short-run
restrictions? Because it is not necessary to add further _long-run_
restrictions, instead that depends on the application and the economic
logic. Achieving identification through only long-run id may be difficult.

> 1) Is it possible to use the total SVEC gui to do the restrictions ?

In principle, yes.
(When you formulate your model and the cointegration setup, remember
that the equations associated with the permanent shocks must come first,
by convention.)
Secondly, please read footnote 20 in the SVAR manual.
And finally, you can formulate additional long-run restrictions with a
pattern matrix that you then paste (its name I mean) into the field
saying "Restr pattern (further long-run C)". The structure of this
pattern matrix is just like the one that specifies short-run restrictions.

If you have further questions about this, it would be helpful to have an
idea of the concrete restrictions that you want to impose, both
short-run and long-run.

cheers
sven
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