Introduction
R is an open-source statistical programming language. It is available
from the following website: R-Cran. You should install R on you
laptop. For us it is probably best to use the following link. You can also
install R-Studio which is an
Integrated Development Environment (IDE) for R.
Competitors
R is one of the main programmable statistical languages. Others
include:
- Stata: Used in academic econometrics. This is not
open source.
- Matlab: Used extensively in academic finance. It is
not open-source. There is an open-source clone called Octave.
It can be downloaded here.
- Python: Computer Language for statistical
programming.
- Julia: New language that is faster than R
- C++: Programming language. Underneath R is C++ in
some cases.
- Rust: New kid on the block.
Advantages of using R
The main advantages of using an open-source statistical programming
language like R are:
- It can be used by anyone for no cost. Your model will not depend on
the next institution having the same software licence
- You can read and adjust functions that have been created by other
people
- There is a large community of people to help you
- Your model will not depend on the next institution having the same
software licence (do firms use Eviews?)
- Programming language will encourage reproducible
research
Reproducible Research
Reproducible Research is good practice and it means that results can
be easily replicated. This means
- Mistakes can be more swiftly identified
- Changes to data or research methods are easier to make
- Replication and clarity are increasingly important for compliance in
financial institutions