Economic Statistics Research Paper Example | Topics and Well Written Essays - 2000 words

Economic Statistics - Research Paper ExampleThe existence of autocorrelation in our estimation is determined using the Durbin Watson test and the Breusch Godfrey test to check for first instal correlation. Autocorrelation however has its own remedies and one of the remedies involves time lagging variables also known as general least squ be method, this method involves replacement of the model with the seri anyy correlated error term with a model with a serially independent error term.Estimation of the model one LGDPt = 1 + 2LXt + 3LFDIt + 4LDIt+5INF involves the use of the info for the period 1970 to 2002 regarding the UK economy, estimation of the above model using Eviews had the following resultsFrom the results of the correlation of determination R squargond which is equal to 0.99229 we can fill up that 99.22% of variations in LGDP are explained by the independent variables, this shows a very strong relationship between the dependent and the independent variables.From the resul ts if we tick off all other factors constant and the level of LX, LFDI, LDI and INF are equal to zero then the level of LGDP will be equal to 11.158 which is also our autonomous value, we can explain the coefficient of the log of exports by stating that if we sacrifice all other factors constant and increase the level of LX by one unit then the level of LGDP will increase by 0.366704 units, also if we bind all other factors constant and increase the level of LFDI by one unit then the level of LGDP will decrease by 0.006544 units.If we also hold all the other factors constant and increase the level of LDI by one unit then the level of LGDP will increase by 0.265253 units, finally if we hold all factors constant and increase the level of INF by one unit then the level of LGDP will decline by 0.00131. Having explained the coefficients of the estimated model we can conclude that if we increase the level of exports and domestic investment then the level of gross domestic product will increase, on the other hand an increase in the level of inflation and foreign direct investment will reduce the level of gross domestic production. Statistical significanceOur estimated coefficients may be statistically significant of statistically insignificant, for this reason there is a need to undertake speculation test to determine their significance in the model, a two get over T test at 95% level of test showed the following results 95% TEST LEVELVARIABLEcoefficientnull hypothesisalternative hypothesisT calculatedT criticalreject or accept nullCB1B1=0B1014.31792.04841 extinguishINFB2B2=0B20-1.4592592.04841ACCEPTLDIB3B3=0B305.1836392.04841REJECTLFDIB4B4=0B40-1.0106412.04841ACCEPTLXB5B5=0B5013.048942.04841REJECTFrom the above test of hypothesis it is clear