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# PS10.1 for Example 10.1 
open data10-1
help lags 
# Generate four lagged variables for M and D 
lags M D  
# Reset sample range and suppress first four observations 
smpl 1965.1 ;
# Estimate kitchen sink model by OLS 
ols r const M D M_1 M_2 M_3 M_4 D_1 D_2 D_3 D_4  
#  Perform LM test for AR(4) 
genr ut=$uhat
lags ut  
smpl 1966.1 ;
# Auxiliary regression for LM test 
ols ut const ut_1 ut_2 ut_3 ut_4 M D M_1 M_2 M_3 M_4 D_1 D_2 D_3 D_4  
genr LM=$trsq
# p-value indicates significant fourth-order autocorrelation 
pvalue X 4 LM
# Reset sample range back and estimate AR(4) by Generalized CORC 
smpl 1965.1 ;
ar 1 2 3 4 ; r const M D M_1 M_2 M_3 M_4 D_1 D_2 D_3 D_4 
# omit all variables with p-values greater than 0.5 
omit M_2 M_3 M_4 D_1 D_2 D_3 
# omit variables one at a time 
omit D_4  
omit D