centeno,alexander 11148691 econmet final paper
TRANSCRIPT
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De La Salle University-Manila
School of Economics
Economics Department
GDP GROWTH:
A REGRESSION ANALYSIS ON THE FACTORS AFFECTING
GDP GROWTH IN THE PHILIPPINES
In Partial Fulfillment
To the Requirements for E!"MET #$%
Presente& to'
Dr( esar Rufino
Presente& )y'
enteno* +le,an&er M(
Decemer ./* $0.$
.
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TABLE OF CONTENTS
I. INTRODUCTION.................................................................................................................4
A. Backgroun o! "#$ S"u%..................................................................................................4
B. S"a"$&$n" o! "#$ Pro'($&................................................................................................)
C. O'*$c"+,$- o! "#$ S"u%.....................................................................................................)
D. S+gn+!+canc$ o! "#$ S"u%..................................................................................................
E. Sco/$ an L+&+"a"+on-.......................................................................................................
II. RE0IEW OF RELATED LITERATURE...........................................................................1
A. Hou-$#o( o! F+na( Con-u&/"+on E2/$n+"ur$..............................................................1
B. I&/or"- o! Goo- an S$r,+c$-.........................................................................................1
C. C(a+&- on C$n"ra( Go,$rn&$n".......................................................................................3
III.OPERATIONAL FRAEWOR5.......................................................................................6
A. o$( S/$c+!+ca"+on...........................................................................................................6
B. 0ar+a'($ L+-" an D$-cr+/"+on-.........................................................................................6
C. A7/r+or+ E2/$c"a"+on-.......................................................................................................89
D. Pr$-$n"a"+on o! Da"a.........................................................................................................8
I#( ETHODOLOGY................................................................................................................84
0. EPRICAL TESTING AND RESULTS DISCUSSION...................................................8)
A. OLS R$gr$--+on.................................................................................................................8)
B. T$-"+ng !or u("+co((+n$ar+"%.............................................................................................81
C. T$-"+ng !or H$"$ro-c$a-"+c+"%...........................................................................................86
D. T$-"+ng !or Au"ocorr$(a"+on...............................................................................................86
$
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#I( CONCLUSION AND RECOENDATION...................................................................
0II. BIBLIOGRAPHY.......................................................................................................4
1
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I. INTRODUCTION
A. Backgroun o! S"u%
Economics is est &efine& as a social science or rather a science that stu&ies human ehavior(
The su2ect of Economics has come a lon3 4ay( The e,istence of Economics has 3iven the 4orl& a ne4
4ay to vie4 the 4orl&( It has helpe& us alon3 the 4ay of un&erstan&in3 the 4orl& that 4e live in an&
4here 4e are 4or5in3( Most of 4hat Economics has e,plore&* has een helpin3 everyone attain
economic success( !ne e,ample is the use of the simple theory an& 3raph of supply an& &eman& of
+lfre& Marshall 6Man5i4* $0078(
It has chan3e& everyone9s lives y usin3 economics to see if a country no4 is achievin3 3oo& y
ein3 a measurement to returns in a &ecision its 3overnment ma5es usin3 policies an& la4s aout
economics( :ou cannot &eny the effect that it has 3iven to policyma5ers an& 3overnment officials( The
policyma5ers an& 3overnment officials are no4 4or5in3 to ma5e policies an& la4s that 4oul& help the
3ro4th of the economy in this country( :ou can also tell that most of those 4ho run for office are
economists tryin3 to instill economic reforms into their platforms that 4oul& affect the 3overnment an&
the country( Truth in all they 4ant to have 3oo& economic 4elfare for the country(
;ith that in min&* questions arise aout economic 4elfare such as 5no4in3 4hat is est 4ay to
5no4 if the economic 4elfare of a country is in a 3oo& place as of the moment( +s of to&ay economists
still ar3ue 4ith one another on 4hich is the est &eterminant of a 3oo& or a& economy of a country*
ut 4hat is accepte& is usin3
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not a threat an& ecause of that* the result is that 4or5ers an& usinesses are 3enerally etter off than
4hen it is not(This 2ust entails that 4henever ousehol& of Final onsumption E,pen&iture *Imports of
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the Philippines an& also to analyAe results from the re3ression(
$( To &etermine 4hether >ousehol& of Final onsumption E,pen&iture *Imports of
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II. RE0IEW OF RELATED LITERATURE
A. Hou-$#o( o! F+na( Con-u&/"+on E2/$n+"ur$
+ccor&in3 to ;orl& )an5* >ousehol& final consumption e,pen&iture 6private consumption8 is
the mar5et value of all 3oo&s an& services* inclu&in3 &urale pro&ucts 6such as cars* 4ashin3 machines*
an& home computers8* purchase& y househol&s( This variale is a representation of consumer
spen&in3 throu3h out annually for the 4hole country 4ith 3oo&s an& services( )ut 4ith all consume&
3oo&s ein3 part of final consumption* there is an e,ception 4ith purchases* o4n-construction or
improvements of resi&ential housin3 ecause they are treate& as part of 3ross capital formation 6#u
uan3 #iet* $0..8(
+ccor&in3 to !ED* >ousehol& final consumption e,pen&iture is typically the lar3est
component of final uses of
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compensation of employees an& investment income 6formerly calle& factor services8 an& transfer
payments( )ut remin&er that 4e are not loo5in3 at the 4hole 4orl& ut loo5in3 at the imports of 3oo&s
an& services 4ithin the Philippines(
+ccor&in3 to the stu&y of Mali5 +AiA-ur-Rehman +tif 6$0.$8* the effect on the 3ro4th of
imports of 3oo&s an& services on
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III. OPERATIONAL FRAEWOR5
A. o$( S/$c+!+ca"+on
GDPgrowth=0 + 1housefinalcomexp + 2impofgoodandserv + 3claicengov+ U
B. 0ar+a'($ L+-" an D$-cr+/"+on-
T4o 5in&s of variales 4ill e use&' the &epen&ent or en&o3enous variale an& the in&epen&ent
variale or e,o3enous variale( En&o3enous variales are variales 4hich can e affecte& y the
e,o3enous variales in a mo&el(
0ar+a'($ D$!+n"+on
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househol&s(
impof3oo&an&serv -E,o3enous variale in the mo&el
-quantitative measurement of imports of 3oo&s
an& services for the country of the Philippines for
the years of .=/0-$0.0
-represent the value of all 3oo&s an& other mar5et
services receive& from the rest of the 4orl&(
claicen3ov -E,o3enous variale in the mo&el
-quantitative measurement of claims on the central
3overnment for the country of the Philippines for
the years of .=/0-$0.0
These variales are to e teste& to see if there is a relationship et4een
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0ar+a'($ A(g$'ra+c S+gn A7/r+or+ E2/$c"a"+on
housefinalcome,p 68 positive >ousehol&s final consumption
e,pen&iture has a positive
relationship to
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same sense
claicen3ov 6-8 ne3ative laims on entral
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Y$ar GDPgro;"# #ou-$!+na(co&$2/ +&/o!gooan-$r
,
c(a+c$ngo,
.==. -0(@B/11%7@.@ $($@=7.@0$1 1$(@/B7=1@1/ -.(@7$@@/1%$/
.==$ 0(11B70101$% 1($@//07B%0= 1%(0$/./@$$=. -$(@10..@$$$@
.==1 $(..710B.B=7 1(0%./01%$7. 1=(/07/@BB.. .7(0707=$.B1@
.==% %(1/B7$111/= 1(B.//B%B.0B %0(.11/7$%1@. .@(=7%[email protected]%@
.==@ %(7B/7=$$$. 1(/.$%=1.$7$ %%(./.$@.$%=% .@(11.7..1@/1
.==7 @(/%@/B1%B.B %(7$1B07/10/ %=($=1$=/B%7@ .%(B..7$%0/$1
.==B @(./@17$$B%7 %(==0$@B@=/1 @=($=1/1@% .B(0%%/7$./BB
.==/ -0(@B7B$$./=$ 1(%%7=%@@71$ @1(/=/0.%/BB7 .1(71%/7.B1%%
.=== 1(0/.=$7B71/ %(0$/$71B1%/ %=(%$0.@00$%$ .1(@@%@1=1%$1
$000 %(%..$.$@0B7 @(.=B.01%7$@ @1(170@770$// .1(0=B0$%11$.
$00. $(/=1==$%.0% %(0/%7@/.00@ @$(//$0/=01%= .@(.7=%0$$@%/
$00$ 1(7%@/=/.1=/ @(.0/@%B$/B @@(7//[email protected]. .7(017B7$7B$.
$001 %(=B0171B1.@ @(%=%1=00%@@ @%(7=$$B/$@%7 .@(.77@.=@BB%
$00% 7(7=B717%$7$ @(=B07=%@..7 @%(07=/B$$@$7 .7($7/.7B%00$
$00@ %(BBB771%70/ %(%$%@@11/.7 @.(B%.@7%%%$% .$(B11$/%=.1.
$007 @($%$=@10%0% %(./$.B@$B$$ %/(17$B7=00$= .$($1$$//.B=1
$00B 7(7.777/@0%@ %(70=7B0%.BB %1(1@/7.07% ..(@.$@1@$$@7
$00/ %(.@$B@B.%@B 1(7B=/7B@$/B 1=(1B0$$70%0$ ..(7$1707$.B7
$00= .(.%/110%0/= $(111.7$%71@ 11(1@/01..@%= .$($1...1$=$$
$0.0 B(71$$7%0=@1 1(1@0@00%@=/ 17(7.7.=B$=$7 .$(@1$B%.0B@=
.1
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0. ETHODOLOGY
The researcher uses soft4are pro3rams specialiAin3 in estimation calle& ST+T+ an&
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0I. EPRICAL TESTING AND RESULTS DISCUSSION
A. OLS R$gr$--+on
The re3ression results of the mo&el are sho4n elo4( !taine& usin3 !r&inary Least Squares
estimation metho&( Re3ressin3
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The re3ression has provi&e& actual values for the un5o4n parameters( Usin3 the operational
frame4or5 mo&el an& the primary !LS re3ression 4e attain this equation'
GDPgrowth=.8118424+2.11814housefinalcomexp!.1"2#$impofgoodandserv+.2#%&8claicengov
+ u
"e,t thin3 4e loo5 at the re3ression is the p-value an& the R-square& values ecause the p value
&etermines the statistical si3nificance of the parameter an& the R-square& is the percent that e,plains
the re3ression in itself( It tal5s aout the e,planatory po4er of the estimate& mo&el(
The R-square& value of the mo&el is 0(B@1@ or B@(1@00C 4hich is nearer to . or .00C( Since
the value is hi3h* this means that the estimate& mo&el is po4erful in e,plainin3 effects of the re3ressors
on the re3ressan&( This level of R-square& also tells us that the &ata fits pretty 4ell for the sample
re3ression( The a&2uste& R-square& value is near to 0(B@1@ or B@(1@00C 4hich is (B$7. or B$(7.00C
as sho4n aove(
The coefficient of househol&s final consumption e,pen&iture is $(../@.%* si3nifyin3 that as
househol&s final consumption e,pen&iture increases y . unit* then
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3oo&s an& services increases y . unit* then
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&epen&ent variale(That is 4hy 4hen a violation comes alon3* as much as prolem resolve it alrea&y
ut it &oes not mean that a violation of is totally 4ron3 ut to see ho4 severe the violation is ecause
estimates coul& still e )LUE(
To test multicollinearity* variance inflation factor 6#IF8 4as use& on oth ere are the results from
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+s you can see they are all near to Aero 4hich means they are tolerale 4ith multicollinearity
4hithin the &ate* an& &oes not nee& to e resolve& or fi,e&(
C. T$-"+ng !or H$"$ro-c$a-"+c+"%
>eterosce&asticity is 4here there is no homosce&asticity( There 4ill e iase& inference 4hich
3ives out more &an3er than 4hat multicollinearity can e tolerale aout ecause if this test is violate&
then the mo&el 4ill not e )LUE anymore(
This is the test result usin3 ST+T+'
Since the p-value is equal to 0($=@% 4hich is more than the si3nificant level of 0(0@* then 4e
can sat that the mo&el is not violatin3 heterosce&asticity(
D. T$-"+ng !or Au"ocorr$(a"+on
+utocorrelation is a violation 4hich mean that the errors are correlate& an& thus violatin3 this
4ill ma5e the re3ression or !LS is no lon3er )LUE or the )est Linear Uniase& Estimator(
To &etect if there is a violation in the mo&el* usin3 the pro3ram ST+T+ an&
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)reusch-ere are the results of
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than 0(0@ 4hich mean there is no autocorrelation in the mo&el( The results coul& also e sai& the same
aout the results of the Durin-;atson Test* that conclu&es there is no autocorrelation in the mo&el(
$.
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#II( CONCLUSION AND RECOENDATION
To attain the ans4ers to the prolems state& at the e3innin3 of the paper* 4e loo5 into the
re3ression an& its si3nificance( +ccor&in3 to the re3ression * the si3nificant factors that affect ousehol&s final consumption e,pen&iture* Imports of 3oo&s an& services* an& laims on
central 3overnment( >ousehol&s final consumption e,pen&iture have a positive an& &irect relationship
meanin3 that 4hen >ousehol&s final consumption e,pen&iture increases 4oul& lea& to an increase in
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interest rates coul& ta5e in effect 4ith the population an& coul& in&ue influence on ho4 consumers of
househol&s consume(
For researchers recommen&ations* this is only for the country of the Philippines an& coul& not
e feasile 4ith all countries( The oservations if increase& coul& chan3e the results for &ifferent
countries an& for &ifferent re3ions( I also su33est to loo5 for &ifferent factors that 4oul& affect
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0II. BIBLIOGRAPHY
!ED 6$0.08* "ational +ccounts at a onors Pro2ects( PaperB%(http'&i3italcommons(i4u(e&ueconNhonpro2B%
Diola* amille * an& Louis )acani ( Philippines9 B(/C 3ro4th in . outperforms peers* hina(
Retrieve& from PhilStar(com "(p(* 10 May $0.1( Retrieve& from
Ohttp'444(philstar(comusiness$0.10@10=%/.0.philippines-B(/-3ro4th-q.-outperforms-
peers- china(
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Retrieve& Decemer .7* $0.1* from http'444(investope&ia(comuniversityrelease
#iet* uan3 #u 6$0..* +pril $B8( Measurement of