The Regression Tests Wizard on the Statistics menu implements various restriction tests on linear regressions. When you select the Wizard, RATS brings up the following dialog box asking you to select the basic type of test you wish to perform:

Exclusion Restrictions

Select this option to perform simple exclusion tests (tests of the hypothesis that the coefficients on certain regressors are zero). RATS will bring up the following dialog box:

Simply select (highlight) the regressor or regressors you want to test for exclusion, and click OK. The Optional Title field allows you to supply a title that will be used to identify the output. This generates a TEST instruction with the ZEROS option. If "Paste AND Execute" is turned on, the TEST instruction will be executed automatically.

Other Constant Restrictions

Use this choice to enter non-zero constant restrictions on parameters. RATS will display the dialog box shown below:

Type in the restricted values for any parameters you want to restrict. Leave the others as "NA", for "Not Applicable", meaning that no restrictions will be applied to those parameters. This generates a TEST instruction with the NOZEROS option. In the example above, we are testing the restriction that the coefficient on IP is equal to 1.0.

General Linear Restrictions

This allows you to test restrictions on linear combinations of parameters. RATS will bring up a dialog box like the following:

The regressors are listed on the left. To test a restriction, enter the desired weights and restricted value in the "Restr 1" column. If you want a joint restriction test on multiple restrictions, scroll to the right and enter the remaining restrictions in additional columns.

In the example above, we are testing the hypothesis that the coefficients on GRM2 and GRPPI{1} are equal, by testing the linear restriction:

1.0*Beta(GRM2) - 1.0*Beta(GRPPI{1}) = 0.0

This generates a RESTRICT command with the appropriate supplementary cards.