Fig1: Export and GDP graph

Fig: Export and Gdp graph

90
80
70
Gdp
60
50
40

0 10 20 30 40 50
Export

INERPRATATION

The above graph shows that, there is a positive relationship between GDP and Export. Meaning that,
when GDP increases export also increases and it is also a weak positive relationship.

Simple linear regression model

. regress gdp export

Source SS df MS Number of obs = 31

F( 1, 29) = 1.80
Model 343.532012 1 343.532012 Prob > F = 0.1906
Residual 5546.20992 29 191.248618 R-squared = 0.0583
Adj R-squared = 0.0259
Total 5889.74194 30 196.324731 Root MSE = 13.829

gdp Coef. Std. Err. t P>|t| [95% Conf. Interval]

export .3931298 .2933266 1.34 0.191 -.2067905 .9930501

_cons 59.10687 4.718587 12.53 0.000 49.45628 68.75746

INTERPRATATION

GDP = α 0 + α 1Exp + ε t

^ = α^ 0 + α^ 1Exp
GDP

GDP= 59.11+0.39Exp

 The interceptα^ 0=59.11 ; meaning that it is the value of GDP; when the level of export is equal to
zero.
 α^ 1 = 0.39 is the coefficient of export meaning that when export increase by 1 unit, GDP increase by
0.39 units
 R =0.058; means that 5.8% of the variation of GDP is explained by export and 94.25 of the
2

variation of GDP is not explained by export.

 Conclusion is that, since a big percentage of GDP is unexplained by export, the model doesn’t fit
data observation.
 The first model on GDP variable (No trend, no intercept)
. dfuller gdp, regress lags(0)

Dickey-Fuller test for unit root Number of obs = 30

Interpolated Dickey-Fuller
Test 1% Critical 5% Critical 10% Critical
Statistic Value Value Value

Z(t) -4.207 -3.716 -2.986 -2.624

MacKinnon approximate p-value for Z(t) = 0.0006

D.gdp Coef. Std. Err. t P>|t| [95% Conf. Interval]

gdp
L1. -.8339265 .1982175 -4.21 0.000 -1.239957 -.4278964
_cons 53.83219 12.88124 4.18 0.000 27.44617 80.21821

INTERPRETATION

H0: GDP is not stationary or got unit root

H1: GDP is stationary and has no unit root

Conclusion: Since t-statistics = 4.207 > t-critical at 5%=2.986, then we accept H1. Meaning that GDP is
stationary and has no unit root.

Second model on GDP variable (trend and intercept)

. dfuller gdp, trend regress lags(0)

Dickey-Fuller test for unit root Number of obs = 30

Interpolated Dickey-Fuller
Test 1% Critical 5% Critical 10% Critical
Statistic Value Value Value

Z(t) -6.188 -4.334 -3.580 -3.228

MacKinnon approximate p-value for Z(t) = 0.0000

D.gdp Coef. Std. Err. t P>|t| [95% Conf. Interval]

gdp
L1. -1.165988 .1884126 -6.19 0.000 -1.552579 -.7793977
_trend 1.049595 .2870576 3.66 0.001 .460601 1.638588
_cons 58.69368 10.8099 5.43 0.000 36.51359 80.87377

Interpretation

Conclusion; Since t-statistics=6.188 > critical at 5%, we accept H 1, meaning that GDP is stationary and
has no unit root.

Third model on GDP variable (Intercept only)

. dfuller gdp, noconstant regress lags(0)

Dickey-Fuller test for unit root Number of obs = 30

Interpolated Dickey-Fuller
Test 1% Critical 5% Critical 10% Critical
Statistic Value Value Value

Z(t) -0.452 -2.652 -1.950 -1.602

D.gdp Coef. Std. Err. t P>|t| [95% Conf. Interval]

gdp
L1. -.0227874 .0503633 -0.45 0.654 -.1257919 .0802172

INTERPRETATION

Conclusion: Since t-statistics =0.452 < t-critical at 5%=1.950, therefore we accept H 0 meaning that GDP
is not stationary or has got unit root.

INTERPRETATION

SECOND QUESTION ;

MULTIPLE REGRESSION MODEL

. regress x y z

Source SS df MS Number of obs = 36

F( 2, 33) = 4378.21
Model 1418028.68 2 709014.338 Prob > F = 0.0000
Residual 5344.07395 33 161.941635 R-squared = 0.9962
Adj R-squared = 0.9960
Total 1423372.75 35 40667.7929 Root MSE = 12.726

x Coef. Std. Err. t P>|t| [95% Conf. Interval]

y 4.867662 .1264617 38.49 0.000 4.610374 5.124951

z -10.33746 6.2274 -1.66 0.106 -23.0072 2.332283
_cons -119.3828 8.933164 -13.36 0.000 -137.5574 -101.2081

INTERPRETATION

Xt= α 0 + α 1

X t= α^ 0 + α^ 1yt + α^ 2zt
^

^
X t= -119.38 + 4.87yt -10.34zt

 The intercept α^ 0=-119.38, it is the value of xt, when the level of yt and zt is equal to zero
 α^ 1=4.87 is the coefficient of yt meaning that when yt increases by 1 unit, xt increases by 4.87
units
 α^ 2= -10.34 Is the coefficient of zt meaning That when zt increases by 1 unit, xt decreases by
10.34 units.
 COINTERGRATION RESULT

. vecrank x y z, trend(constant) max

Johansen tests for cointegration

Trend: constant Number of obs = 34
Sample: 1962 - 1995 Lags = 2

5%
maximum trace critical
rank parms LL eigenvalue statistic value
0 12 -205.98872 . 24.0810* 29.68
1 17 -197.04751 0.40901 6.1986 15.41
2 20 -194.09363 0.15950 0.2909 3.76
3 21 -193.94821 0.00852

5%
maximum max critical
rank parms LL eigenvalue statistic value
0 12 -205.98872 . 17.8824 20.97
1 17 -197.04751 0.40901 5.9077 14.07
2 20 -194.09363 0.15950 0.2909 3.76
3 21 -193.94821 0.00852

INTERPRATION

H0: 0; means that there is no cointegration among variables

H1: 1; there is cointegration among variables

Conclusion: Since Trace statistics=24.08 < 5% critical value= 29.68, therefore there is cointegration
among variables. But there is cointegration in shortrun.
. var x y z, lags(1/2)

Vector autoregression

Sample: 1962 - 1995 No. of obs = 34

Log likelihood = -193.9482 AIC = 12.64401
FPE = 63.32578 HQIC = 12.96552
Det(Sigma_ml) = 18.08507 SBIC = 13.58676

Equation Parms RMSE R-sq chi2 P>chi2

x 7 28.2969 0.9832 1988.073 0.0000

y 7 4.23839 0.9916 4016.059 0.0000
z 7 .255821 0.9069 331.027 0.0000

Coef. Std. Err. z P>|z| [95% Conf. Interval]

x
x
L1. -.2474862 .6874843 -0.36 0.719 -1.594931 1.099958
L2. .4910596 .6927699 0.71 0.478 -.8667444 1.848864
y
L1. 5.056913 4.680818 1.08 0.280 -4.117322 14.23115
L2. -1.449906 4.736006 -0.31 0.759 -10.73231 7.832496
z
L1. 28.05303 17.94615 1.56 0.118 -7.120783 63.22685
L2. -21.67843 16.79534 -1.29 0.197 -54.59669 11.23983
_cons -105.2384 51.91578 -2.03 0.043 -206.9915 -3.48537

y
x
L1. -.1127707 .1029732 -1.10 0.273 -.3145945 .0890531
L2. .0129674 .1037649 0.12 0.901 -.190408 .2163429
y
L1. 1.318171 .7011054 1.88 0.060 -.05597 2.692313
L2. .1498468 .7093716 0.21 0.833 -1.240496 1.54019
z
L1. 3.031806 2.688023 1.13 0.259 -2.236622 8.300233
L2. -1.481149 2.51565 -0.59 0.556 -6.411733 3.449435
_cons -13.13856 7.776083 -1.69 0.091 -28.3794 2.10228

z
x
L1. -.0017951 .0062153 -0.29 0.773 -.0139767 .0103866
L2. -.0021651 .006263 -0.35 0.730 -.0144404 .0101102
y
L1. .0179523 .0423173 0.42 0.671 -.064988 .1008927
L2. .0099241 .0428162 0.23 0.817 -.0739942 .0938423
z
L1. .5467815 .1622435 3.37 0.001 .2287901 .8647729
L2. -.117117 .1518395 -0.77 0.441 -.4147169 .1804829
_cons .3637709 .4693483 0.78 0.438 -.5561348 1.283677

INTERPRETATION

X-VARIABLE

On X

 At L1: P value= 0.72 > 0.05; we reject H0 meaning that X and X have short run relationship
 At L2: P value= 0.48 > 0.05; we reject H0 meaning that X and X have a short run relationship
 On Y

 At L1: P value > 0.05; we reject H0 meaning that Y and X have short run relationship
 At L2: P value > 0.05; we reject H0 meaning that Y and X have a short run relationship

On Z

 At L1: P value > 0.05; we reject H0 meaning that Z and X have short run relationship
 At L2: P value > 0.05; we reject H0 meaning that Z and X have a short run relationship

Y-VARIABLES
On X
 At L1: P value > 0.05; we reject H0 meaning that Y and X have short run relationship
 At L2: P value > 0.05; we reject H0 meaning that Y and X have a short run relationship
On Y
 At L1: P value > 0.05; we reject H0 meaning that Y and Y have short run relationship
 At L2: P value > 0.05; we reject H0 meaning that Y and Y have a short run relationship
On Z
 At L1: P value > 0.05; we reject H0 meaning that Y and Z have short run relationship
 At L2: P value > 0.05; we reject H0 meaning that Y and Z have a short run relationship

Z-VARAIABLE
On X
 At L1: P value > 0.05; we reject H0 meaning that Z and X have short run relationship
 At L2: P value > 0.05; we reject H0 meaning that Z and X have a short run relationship

On Y
 At L1: P value > 0.05; we reject H0 meaning that Y and Z have short run relationship
 At L2: P value > 0.05; we reject H0 meaning that Y and Z have a short run relationship

On Z
 At L1: P value > 0.05; we reject H0 meaning that Z and Z have short run relationship
 At L2: P value > 0.05; we reject H0 meaning that Z and Z have a short run relationship