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THE SPECIFICATION OF HARDWARE AND SOFTWARE REQUIRED

FOR ADB TA ON MACRO ECONOMIC MODELING OF NEPAL

Asian Development Bank Project on Upgrading Nepal Macroeconomic Model

Nepal Rastra Bank, Kathmandu, Nepal

DR. TARUN DAS1,

(FORMERLY, ECONOMIC ADVISER, MINISTRY OF FINANCE)
PROF. DURGA LAL2 SHRESTHA,
DR. VIKAS RAJ SATYAL3
MR. ROJAN BAJRACHARYA4
For any clarifications, write to: das.tarun@hotmail.com

Table of Contents

Page No.
OBJECTIVES OF THE PROJECT ....................................................................................................................2

SOFTWARES REQUIREMENT ........................................................................................................................2

RECOMMENDED SOFTWARE – EVIEWS.........................................................................................................................2

SYSTEM REQUIREMENT FOR THE SOFTWARE – EVIEWS.................................................................................................2
MAJOR FEATURES OF THE SOFTWARE - EVIEWS..........................................................................................................3
Database and Data Handling Capacity.........................................................................................................3
Working Environment ....................................................................................................................................4
Tools for Data Analysis .................................................................................................................................4
Data Presentation Mode ................................................................................................................................5
COMPARATIVE ANALYSIS OF MOSTLY USED ECONOMETRIC AND STATISTICAL SOFTWARES................................................6
VISUAL DISPLAY SOFTWARE ....................................................................................................................................8

HARDWARE REQUIREMENT .........................................................................................................................8

DESKTOP COMPUTER ..............................................................................................................................................8

SERVER COMPUTER..................................................................................................................................................9
PHOTOCOPY MACHINE............................................................................................................................................10
PRINTER ..............................................................................................................................................................10

BUDGET FOR THE SOFTWARE AND HARDWARE ................................................................................10

1
Team Leader and International Macroeconomic Modeling Specialist, Formerly Economic Adviser,
Ministry Finance, India
2
National Macroeconomic Modeling Specialist
3
National Econometrician
4
National IT Specialist
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Objectives of the Project

The major objectives of the ADB TA project are to update the existing previously developed
Nepal Macroeconomic Model (NMEM) and develop a Dynamic Stochastic General
Equilibrium Model (GSGEM) and to improve the capacity of the concerned stakeholders
(especially, NRB, MOF, NPC, CBS and Nepalese Universities mainly Tribhuvan University)
by providing them training on updating the NMEM and developing using the specified
software. Both of these activities need the specific hardware and software requirements
which need to be provided to the implementing agencies. In this regard, the TA team has
intensively explored for selecting the right one among the available options

Softwares Requirement
The software requirement has been explored under two lines. Firstly, the TA team needs to
select the best econometric software having the capacity of calibrating the pre- defined
econometric models. Secondly, the TA team needs to select the user friendly’s visual display
software having capacity to run simulation exercise (especially policy shock) in the model
without using the econometric software’s command. This second requirement also includes
the selection of appropriate database software in which all the data required by the model
will be stored.

Recommended Software – Eviews

That software - EViews5 (EViews version 6, hereafter will be called only EViews), which is
very user friendly, easy for data transformation/crunching, fast enough for running several
equations, robust for programming and using data from different platforms, has been selected
by the team for achieving the objective of the project be used through studying the major
features of the software – Eviews and comparing mostly used econometric and statistical
Softwares.

System Requirement for the Software – EViews

EViews 6 is compatible with most versions of the Windows Operating system including:
Windows 98/Me/NT 4.0/2000/XP/Vista. It can tackle problems involving up to 15 millions
of observations or thousands of series. It takes full advantage of 32-bit Windows’ virtual
memory, so that it can work with data sets that exceed system’s physical memory, subject to
operating system restrictions on the total amount of memory, up to 3GB with Windows XP
and Vista.

5
Quantitative Micro Software (QMS) has been a leading developer of statistical software for microcomputers for over two
decades. Its first product was the popular MicroTSP software used for model simulation and forecasting. MicroTSP was
replaced by the Windows-based EViews in 1994.
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Major Features of the Software - EViews

Database and Data Handling Capacity

EViews Database: It provides sophisticated built-in database features. It is a collection of
EViews objects maintained in a single file on disk. It need not be loaded into memory in
order to access an object inside it, and the objects in the database are not restricted to being
of a single frequency or range. It offers powerful query features which can be used to search
through the database for a particular series or select a set of series with a common property.
Series contained in it may be copied (fetched) into a workfile, or they may be accessed and
used by EViews procedures without being fetched into workfiles. In both cases, EViews will
automatically perform frequency conversion if necessary. Automatic search capabilities
allow you to specify a list of databases to be searched when a series you need cannot be
found in the current workfile.

Data Handling and Crunching: The NMEM project consists of complex data type
including regular and irregular dated data, cross-section data with observation, and time-
series data. EViews can proficiently handle such complex data structures. It also provides a
wide range of tools for working with data sets (workfiles) including the ability to combine
series by complex match merge criteria and workfile procedures for changing the structure of
data by joining, appending and taking subset, resize, sort, and reshape.

Dynamic Object Updating: EViews incorporates the best of modern spreadsheet and
relational database technology into tools for performing the traditional tasks of statistical
software. The EViews object-based approach includes sophisticated linking technology that
allows defining relationships between multiple objects and external data sources. Series
objects, for example, may be linked by formula to data in other series, to match merged or
frequency converted data from alternate data sets, or to data from external databases. When
defined in this fashion, the linked series dynamically updates its data whenever the
underlying data change. Similarly, an EViews model simulation object can be linked to
equation or system objects so that the model specification updates automatically when the
underlying equation or system is re-specified or re-estimated. These object updating features
are the most useful feature of NMEM project as the model is expected to be updated very
frequently in future.

Import and Export Capacity: EViews can exchange data with other programs very easily.
It can reads and writes over 20 popular data formats including Excel, formatted and
unformatted ASCII/Text, SPSS, SAS (transport), Stata, SPSS, Html, Microsoft Access,
Gauss Dataset, Rats, GiveWin/PC Give, TSP, Aremos, dBase, Lotus, and binary files.
Importing of data to EViews platform is so easy and only drag-and-drop from foreign file
onto can create the EViews workfile. There are dialog and wizards to customize the
importing in easy-to-use way.

Data Handling Capacity: The number of observations and variables which EViews can
handle is practically unlimited. The physical capacity is specified as following:
Specifications Requirements
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Maximum observations per series 4 million (by default), may be increased if

Total observations: (series x obs per series)
Maximum objects per workfile
Maximum objects per database
desired, subject to memory restrictions
limited only by available RAM
limited only by available RAM
limited to 1 million objects, 2 gigabytes or
available disk space

Working Environment

Multiple Window Display: EViews allows for simultaneous display of multiple objects,
each in its own window. This true multiple window support makes it easy to perform side-
by-side comparisons of series plots, hypothesis tests, equation estimates, or model forecasts
developed under alternative assumptions.

Command Line Programming and Program Interface: NMEM needs complex

programming to operationalized so that the point-and-click mode of operation will not be
appropriate for it rather programming in text files will be needed so that the whole program
can be modified and verified as per needed and can be saved in files. EViews has a powerful
command language that provides access to all of the features that are available through the
menus.

EViews allows you to enter individual commands for immediate or batch execution and
allows use of looping and condition branching, as well as subroutine and macro processing. It
also allows matrix primitives, from simple multiplication and inversion, to more advanced
procedures for Kronecker products, eigenvector solution, and singular value decomposition
with the tools for solving complex mathematical problems like linear and dynamic
programming.

Tools for Data Analysis

Basic Analysis Tools: EViews supports a wide range of basic statistical analyses, from
simple descriptive statistics to parametric and nonparametric hypothesis tests including
testing against specific values, testing for equality between series, or testing for equality
within a single series when classified by other variables. Tools for covariance and factor
analysis allow you to examine the relationships between variables.

Special Tools for Time-Series Analysis: EViews standout among other competitor software
in the tools for sophisticated and diverse tests for time-series data ranging from simple
autocorrelation plots to frequency filters, from Q-statistics to unit root tests in a very
simplified way. It can provide autocorrelation and partial autocorrelation functions, Q-
statistics, and cross-correlation functions, unit root tests (ADF, Phillips-Perron, KPSS,
DFGLS, ERS, or Ng-Perron for single time series and Levin-Lin-Chu, Breitung, Im-Pesaran-
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Shin, Fisher, or Hadri for panel data), cointegration tests (Johansen for with MacKinnon-
Haug-Michelis critical values and p-values ordinary data, and Pedroni, Kao, or Fisher for
panel data), causality, and independence tests. EViews computes trends and circles from time
series data using the Hodrick-Prescott filter, Baxter-King, Christiano-Fitzgerald fixed length
and Christiano-Fitzgerald asymmetric full sample band-pass (frequency) filters.

System Estimation: EViews offers powerful tools for estimating and analyzing both linear
and nonlinear systems of equations by OLS, two-stage least squares, seemingly unrelated
regression, three-stage least squares, GMM, and FIML. The system may contain cross
equation restrictions and in most cases, autoregressive errors of any order.

VAR and VEC Models: Vector Autoregression(VAR) and Vector Error Correction(VEC)
models can be easily estimated by EViews. Once estimated, it can examine the impulse
response functions and variance decompositions for the VAR or VEC. VAR impulse
response functions and decompositions feature standard errors calculated either analytically
or by Monte Carlo methods and may be displayed in a variety of graphical and tabular
formats. For cointegrating relations and/or adjustment coefficients, EViews' VARs also
allows estimating structural factorizations (VARs) by imposing short-run (Sims 1986) or
long-run (Blanchard and Quah 1989) restrictions. Over-identifying restrictions may be tested
using the LR statistic. VARs support a variety of views allowing testing the structure of the
estimated specification. With a few clicks of the mouse, it can display the inverse roots of the
characteristic AR polynomial, perform Granger causality and joint lag exclusion tests,
evaluate various lag length criteria, view correlograms and autocorrelations, or perform
various multivariate residual based diagnostics.

Forecasting and Simulation for Multiple Equations: EViews can handle multiple equation
forecasting. The EViews can provide the tools for managing, analyzing and solving large
systems of equations. It offers a variety of solution methods, including stochastic simulation
and forward solution for model consistent expectations, as well as tools for managing
alternative solution scenarios and user-specified add factors. It also allows to examine the
dependency structure of the endogenous variables and the block structure of the model
equations, to solve simple control problems, and to generate custom tables and graphs that
compare solution results under alternative assumptions.

Diagnostics Tests: Once estimated, EViews makes it easy to perform specification and
diagnostic tests. These tests include Wald tests of linear and nonlinear coefficient restrictions,
likelihood ratio and F-tests for omitted or redundant variables, Lagrange multiplier tests for
serial correlation and ARCH, Breusch-Pagan-Godfrey, Harvey, Glejser, and White
heteroskedasticity tests, Ramsey RESET tests, Quandt-Andrews breakpoint, and Chow
forecast and breakpoint tests.

Data Presentation Mode

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High Quality Output: EViews can produce high quality graphs and tables for publication or
inclusion in other applications and spool object for the compilation of different outputs.

Graphic Presentation: EViews supports a wide range of basic graph types including line
graphs, bar graphs, filled area graphs, pie charts, scatter diagrams, mixed line-bar graphs,
high-low graphs, scatter-plots, and box-plots. Any number of graphs can be combined in a
single graph for presentation. There are many easy options for editing the graph from
symbols, color, frame, shading, labeling and scaling including logarithmic scaling and dual
scale graphs. Customizing a graph is as simple as modifying or moving graphic elements on
the screen. Using copy-and-paste or by writing the graph to a Windows metafile, or a
PostScript, bitmap, PNG, GIF, or JPEG file these graphs can be transferred into other
applications.

Tables: Extensive table customization tools allow producing presentation quality tables for
inclusion in other programs. An easy-to-use, interactive interface gives control over cell font
face, size, and color, cell background color and borders, merging, and annotation. The final
outputs can be copy-and-paste to another application or save it as an RTF, HTML, or text
file.

Spooling Facility: EViews offers a new spool object that allow creating collections of
various EViews’ output allowing to store multiple tables, graphs, text, and spools. Various
management tools are allowed to add, delete, extract, resize, annotate, hide and edit the
objects in the spool. This spool is useful for organizing results, for example for creating a log
of the results for a project or an EViews session, or perhaps for gathering output for a
presentation.

Comparative Analysis of Mostly Used Econometric and Statistical Softwares

After a quick survey of implementing agencies (mainly, NRB, MOF, NPC), the TA team
finds that they have shown their interest to continue with their existing statistical and
econometric softwares – Eviews, SPSS and STATA. So, the TA team has selected the best
software among these three softwares. These softwares have been evaluated on the basis of
those criteria such as: Data Handling, Data Management, Data Updates, Powerful Statistical
Analytical Tools, Equation Estimation and Forecasting, and Model Simulation, which are
mainly required for macro modeling exercise,.

Table 1: Comparative Chart of Econometric and Statistical Softwares

SPSS STATA EViews
Data Handling Good for Cross Good for Cross Good for Time Series
Section Data but Section as well as Data
time consuming for Time Series Data
Time Series
Data Management Facilities to migrate Facilities to migrate Facilities to migrate
Data other database Data other database Data other database
softwares viz. MS- softwares viz. MS- softwares viz. MS-
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Excel, MS- Access Excel, MS- Access Excel, MS- Access

Data Updates User Friendly Data Updates though sheet User Friendly Data
Updates system and risk of omission Updates system using
using combo box and repetition combo box
Powerful Statistical Good for Cross Good for Cross Good for Time Series
Analytical Tools Section Data but Section as well as Data and practical for
time consuming time series data but professional users.
process for Time the method only fit
Series for academic
purpose.
Equation Good for Cross Good for Cross Good for Time Series
Estimation and Section Data but Section as well as Data and practical for
Forecasting time consuming for time series data but professional users.
Time Series the method only fit
for academic
purpose.
Model Simulation Time Consuming to Lengthy so only Quick and can be
Conduct Model feasible for academicconducted in various
Simulation purpose modes depending on
size of model.
(Source: Prepared by TA team referring the website of concern software)

The Table 1 depicts that the Eviews is comparatively useful for macroeconomic modeling
exercise as it is good for powerful statistical analysis of time series, equation estimation and
forecasting of time series data and model simulation. Regarding other two, SPSS is more
feasible for cross section data which is not the data type for macro modeling and STATA has
time consuming process being only feasible for academic purpose.

In this light, the TA team request for the purchase of Eviews software’s latest version (i.e.
Eviews Version 6) license from its vendor Quantitative Micro Software (QMS). The TA
team advises to purchase the 20 licensing of Eviews with two being stationed at ADB- NRM,
4 being stationed with ADB TA team and the rest being distributed to various implementing
governmental agencies and universities. Specifically, Nepal Rastra Bank, being the main
implementing agencies of the TA, should receive tentatively 4; Ministry of Finance; Central
Bureau of Statistics and National Planning Commission should receive tentatively 2 each;
and the rest should be distributed to universities with each receiving one license.

The Eviews also provides the facility to purchase Computer Lab Licenses in which a single
license for lab can provide Eviews access to multiple computer of the lab stationed at one
place. However, this option is not feasible for this TA purpose because the executing
agencies of this TA are spread in different places.

The tentative cost estimates for the 20 licenses of Eviews and the Eviews User’s Guide is as
follow:
Table 2: Cost Estimates Eviews
Details Amount (USD)##
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Basic License Fee 1200

20 Concurrent Use License Pack 2200
#
Complete Set of Eview’s User Guide (4set*150) 600
Total 4000
(Source: http://www.eviews.com )
( # Each set will be provided to Nepal Rastra Bank, Central Bureau of Statistics, National
Planning Commission and ADB- NRM. The other agencies and institution can print the
user’s guides provided in PDF version along with Eviews Installation CD. ## Eviews website
available at http://www.eviews.com reports that the price may subjected to change without
prior notice so consider the price in 10% margin.)

Visual Display Software

A teller based visual display software needs to be designed in order to make the macro model
user friendly to high class policy makers, bureaucrats, economists and other stakeholders.
This software will access the results of macro model exercise to the user without using
Eviews command so that busy high level personal can also use the model results in their
various assignments. This software needs to be compatible with operating system of
Windows XP, 2000, Vista and higher. The local software company can provide us this teller
made software at the cost of around USD 2500 to 2800. (Please Note: The TA team has
estimated this cost as per the TA member’s experience with similar type of experience)

Hardware Requirement
The hardware capacity which can operate the above mentioned software is required to be
provided to all implementation agencies. During the visit to the concern implementing
agencies, the TA team finds that the officials of implementing agencies said that the
computers they already have can operate the Eviews But, most of these computers are
operated for daily work purpose. So these computers do not have enough hard disk memory
and process’s memory so it won’t be compatible to install the licensed Eviews in such
computer. They cause slow operation of Eviews and other required software frequent hang
while the complex simulation are running in the Eviews. It has also been observed that the
relevant department of Nepal Rastra Bank that will provide the data for modeling exercise is
inadequately equipped with the logistic equipments like printer and photocopy machine.
These equipments are required to have hardcopies of data for its proper review before
injecting to the database of the model and for inter agencies communication to revise the
model. In this regard, the TA team has proposed to provide the following equipments to
concern agencies.

Desktop Computer
The desktop computers with a license of Eviews are to be provided to all agencies other than
ADB- NRM and TA team. So the required number of the desktop computers will be 14
which will be distributed as per Eviews license to concern agencies. The minimum required
specification for the desktop computer in order to operate Eviews is as follow:
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− Intel® Pentium® Dual-Core Processor E2220 (1MB L2 cache, 2.40GHz, 800MHz

FSB)
− 4GB (2/2) DDR2 SDRAM
− 300GB SATA Hard Drive (At Least)
− Two USB 2.0 (At Least)
− 1 eSATA port
− Variable-speed Super-Multi drive
− NVIDIA® GeForce® G100 graphics
− VGA, HDMI, DVI, headphones, microphone and five audio ports
− Gigabit LAN
− V.92 Modem
− Genuine Windows Vista Home Premium 64-bit version
− Power Supply 220 watts

The cost for the desktop computer depends on its brand. Basically, the most available brands
in Nepal cost between USD 535 to 935. There is so wide deviation between prices because
some brands also provide the licensed operating system whose costs are also included in the
computer’s price.

Server Computer
It has been observed that the concern Department of Nepal Rastra Bank, which provides the
data for macro modeling exercise, has maintained their database in scattered way because the
department doesn’t have its own server to maintain data in systematic way. For this purpose,
the TA team advises to provide a server computer to the concern Department of Nepal Rastra
Bank. The specification of server is as follow:

− Dual-Core Intel® Xeon® X5270 up to 3.5 GHz and up to 1333 MHz front- side bus
or Quad-Core Intel® Xeon® X5470 up to 3.33 GHz and up to 1333 MHz front- side
bus
− 2x2 or 2x6 MB (dual-core) and 2x6 MB (quad-core)
− 1 GB or 32 GB Fully Buffered DIMM 667 MHz
− 2 PCI-Express (x8) half-length, full-height or optional riser card for 1 PCI-X (64-bit
133 MHz)
− 2/2 (3.5" form factor) or 4/4 (2.5" form factor)
− 600 GB 3.5" hot-swap SAS or up to 2.0 TB simple-swap SATA or 293.6 GB 2.5"
hot-swap SAS
− Integrated dual Gigabit Ethernet
− Power Supply 670W 1/2

The cost for the server computer depends on its brand. Basically, the most available brands in
Nepal cost between USD 1800 to 2300.
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Photocopy Machine
As discussed earlier on the limited accessories equipments in the concern department of
Nepal Rastra Bank, the TA team advises to provide one photo copy machine of medium
capacity to the concern department. The specification of photocopy machine is as follow:

− Digital Multifunctional lmaging System

− Single Component Dry Toner Projection Development System
− Standard 64 MB
− Using the platen glass 7.9 seconds or less (A4, Direct Paper Drawer 1)
− 18 ppm(A4)
− Reading 600 x 600 dpi
− Printing 600 X 600 dpi
− Optiona Automatic Duplexing

The cost for the photocopy machine depends on its brand. Basically, the most available
brands in Nepal cost between USD 1800 to 2000.

Printer
The TA team also advises to provide two printers of medium capacity to the concern
department of Nepal Rastra Bank. The specification of printer machine is as follow:

− Laser Print
− 12 pages per minute (A4 size and letter)
− 600 X600 dpi resolution
− Uses PC memory (Standard 2MB on-board)
− USB 2.0 Hi-Speed
− A4, B5, A5, LGL,LTR, Executive Envelope
− Face down: 100 sheets
− 220-240 V (+/-10%),50/60Hz (+/-2Hz)
− Windows 98/ME/2000/XP, Linux (CUPS)

The cost for the printer depends on its brand. Basically, the most available brands in Nepal
cost between USD 170 to 250.

Budget for the Software and Hardware

The tentative budget for the procurement of hardware and software is provided in table 3.
The cost for hardware component is provided in range because the price of hardware is as per
the brand. Further, there might be some changes on the price so the budget should be
prepared with plus/minus 10 percent range in prices.

Table 3: Budget for the Software and Hardware*

Details Amount (in USD)
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20 License of Eviews (Along with Basic License) 3400

4 Complete set of Eview’s User Guide 600
Visual Display Software 2500 – 2800
14 Desktop Computer ( 535*14 – 935*14) 7490 – 13090
1 Server Computer (1800*1 – 2300*1) 1800 – 2300
2 Photocopy Machine (1800*1 – 2000*1) 1800 – 2000
2 Printer (170*2 – 250*2) 340 – 500
Total 17930 – 24690
(Source: Collected by TA Team from Market)
(* The price might fluctuate in 10 percent range)

The TA has advised to provide the required software and hardware to the concern agencies
earliest by possible tentatively in the early days of TA’s second phase (i.e. 1 st Week of
January, 2010) so that modeling exercise is smoothly implemented.

- The End -
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