BANKING ACADEMY

INTERNATIONAL SCHOOL OF BUSINESS

MIDTERM REPORT OF ECONOMETRICS

TOPIC: THE FACTORS EFFECTING GPD OF COUNTRIES
IN THE WORD IN 2015

Lecturer: PhD. Dinh Thi Thanh Binh

Class: CityU 7C
Members of team:
- Le Nhu Nguyet CA7-074
- Le Mai Phuong CA7-077
- Nguyen Thi Yen CA7-116
- Bui Thi Thao Van CA7-113
- Nguyen Thi Thanh Thuy CA7-098

HA NOI, THANG 12 NAM 2020

 CONTENTS
Introduction .................................................................................................................. 2
Chapter 1: Theoretical and practical basis of GDP and a number of factors
affecting GDP ................................................................................................................ 3
1.1. Rationale of the study ..................................................................................... 3
1.2. Definition.......................................................................................................... 3
1.3. Literature review on the factors affecting GDP in countries around the
world. .......................................................................................................................... 5
Chapter 2: Research methodology and econometric model ..................................... 6
2.1. Method Research ................................................................................................ 6
2.1.1 Model building method................................................................................... 6
2.1.2 Methods of data collection and processing..................................................... 6
2.2 Building econometric models ............................................................................. 6
2.2.1 Overall model: ................................................................................................ 7
2.2.2 A random sample regression model ............................................................... 7
2.3 Description of the data ........................................................................................ 7
2.3.1. Data source .................................................................................................... 7
2.3.2. Describe the statistics .................................................................................... 8
3.1 Regression model ................................................................................................. 9
3.2 Analyze the results after run regression model ................................................ 9
3.3 Meaning of Partial Regression Coefficients...................................................... 9
3.4 Check the suitability of the model ................................................................... 10
3.5 Check the model's defects ................................................................................. 10
3.5.1: Multicollinearity .......................................................................................... 10
3.5.2. Variable error variance ................................................................................ 12
3.6. Correct model errors ....................................................................................... 15
Conclusion ................................................................................................................... 17
Reference ..................................................................................................................... 18
Appendix...................................................................................................................... 19

1
 Introduction
Econometrics is a social science in which the tools of economic theory, mathematics
and statistical speculation are applied to the analysis of economic problems. Econometrics use
methodological tools of accounting to find out the nature of the statistics, make conclusions
about the collected statistics from which to make predictions about economic phenomenon.
Since its inception up to now, econometrics have provided economists with a sharp measuring
tool for measuring economic relations. As students studying economics major, they recognize
the need to study and learn about econometrics in logic analysis and problem research. In order
to understand more deeply about bringing econometrics into real life and applying
econometrics properly and effectively, the group cm would like to build the REPORT ON
ECONOMETRICS under the guidance of PhD. Dinh Thi Thanh Binh.
Gross domestic product (GDP) is a basic indicator reflecting economic growth,
economic size, per capita economic development, economic structure and price changes. a
country. Therefore, GDP is an important and suitable tool widely used around the world to
survey developments and changes in the national economy. Accurate perception and proper
use of this indicator have important implications in surveying and evaluating the state of
sustainable, smooth and comprehensive development of the economy. Any country wants to
maintain a growing economy with currency stability and jobs for the population whose GDP
is one of the specific signals for government efforts. Therefore, studying the key factors of
GDP growth, the factors that influence GDP, can help the government change its policies to
achieve its goals to promote economic growth. These are macro issues that everyone working
in the economic sector is concerned about. That is why our team decided to study the topic:
“Some factors affecting the gross domestic product (GDP) of countries in the world in 2015.
This essay will use table data analysis methods to study and analyze some factors
to GDP in 60 countries in 2016. The research object is the degree of influence of the four
main influencing factors, including: investment, export, import and inflation rate
By applying the knowledge from econometrics with socio-economic knowledge to
analyze and find relationships between variables, the essay of the research team will answer
the questions : How do the main factors affecting GDP ? What is the specific level of
influence? …During the study, usage data were collected from the World Bank and used the
econometric analysis tool STATA software to analyze and research based on the data
The research team has put a lot of effort in searching for information to complete
this essay, but due to many limitations in expertise and experience, the essay cannot be
avoided. The research team is looking forward to receiving comments from TS.Dinh
Thi Thanh Binh to be able to complete the essay better.
The team sincerely thanks!

2
Chapter 1: Theoretical and practical basis of GDP and a number of factors
affecting GDP
1.1. Rationale of the study
Economic growth and development is the first goal of all countries in the world,
the primary measure of the progress of nations in each stage. Each country has its own
definition of its own strategy for socio-economic development. Not only a country, but
in Vietnam, too, always considers economic development a very urgent task. After more
than 20 years of renovation, Vietnam has made remarkable progress, our country has
moved from a stagnant subsidized economy to a market economy in the socialist
orientation. The annual gross national income has increased. Moreover, our country is
now joining the WTO global economy, integrating into the international economy. This
is a very important step and opens up a promising economy. Economic growth takes
place, it is manifested that the GDP growth rate is increasing and stable for a long time,
the economy will have many great achievements. Thus, the more stable people's income
and living standard, the more developed the country is. Therefore, economic growth is
considered as an attractive issue in economic research, it is the focal point to reflect the
changing face of the national economy. To evaluate a country's economy, economists
evaluate the gross domestic product GDP.
1.2. Definition
Gross domestic product or GDP is the monetary value of all final products and
services produced within a territory over a specified period of time, usually a year. GDP
is a measure of the value of a country's economic activity. In terms of nature, GDP is
an index given to assess the overall growth rate of the economy, assessing the
development level of a region / country.
Investing has different implications in finance and economics. In economics,
investment is related to saving and delaying consumption. Investment is related to many
sectors of the economy, such as business management and finance whether for
households, businesses, or government. In finance, financial investment is placing
money in an asset with the expectation of capital appreciation, often in the long term.
This may or may not be supported by research and analysis. Most or all investment
involves some form of risk, such as investments in equity, real estate and even fixed-
rate securities that could, among other things, inflation risk.
According to classical international trade theory, when the division of social
labor reaches a certain level, production specialization is carried out allowing for higher
productivity, more and more goods do not just respond. To fully satisfy domestic
consumption demand, which inevitably leads to the exchange of goods outside the

3
national territory. Thus, in essence, export is the exchange of goods between countries,
there are many different interpretations of export such as:
According to the Vietnam Open Learning Library (VOER), exporting is a basic activity
of foreign trade, it has been around for a long time and has grown steadily. From the
first basic form of goods exchange between countries, up to now it has been very
developed and manifested in many forms. Today's export activities take place on a
global scale, in all industries and sectors of the economy, not only tangible goods but
also intangible goods with an increasing proportion. Export is aimed at collecting
foreign currencies, increasing accumulation for the State budget, developing production
and business, exploiting the advantages of the country potentials and improving the
quality of people's life.
Import means the import of goods and raw materials from other countries in the
world to their own territory for consumption or to meet production needs. This is how
most people define an import normally. However, in the Wikipedia and Vietnam's
commercial law, imported goods are defined in more detail.
According to Wikipedia, imports are understood as transactions related to goods or
services from an external source through national borders. This is an international
business, not a single wholesaling, but operated under a system, including organizations
inside and outside the importing country. This exchange of goods, materials and services
will be based on the principle of par value, with currency used as a broker.
In Article 28, Clause 1 of the Commercial Law 2015, the import definition is as
follows: “Import of goods means the goods brought into the territory of Vietnam from
abroad or from a special area located in the territory of Vietnam. is considered a private
customs area as provided for by law.”
Inflation is the continual increase in the general price of goods and services over time
and the loss of the value of a currency. When the overall price rises, a single currency can
buy less goods and services than before, so inflation reflects a decrease in purchasing power
per unit of currency. When compared to other countries, inflation is a decrease in the
monetary value of one country relative to the currencies of another. In the first sense, one
understands that inflation of a currency affects the scope of a country's economy, while in the
second one understands that inflation of a currency affects the scope of the economy. actual
use of that currency. The sphere of influence of these two components remains a
controversial issue among macroeconomists. The opposite of inflation is deflation. An index
of zero inflation or a small positive index is called "price stability".

4
1.3. Literature review on the factors affecting GDP in countries around the
world.
There have been numerous studies on the factors affecting GDP in the world
through quantitative and qualitative research.
In the 2015, Master Nguyen Minh Sang & Ngo Nu Dieu Khue's study is conducted to
test the non-linear relationship between inflation and economic growth by using self-
regression method with a sample of 17 developing countries, including Vietnam period
from 2000 to 2012. The model estimation results showed that there exists an inflation
threshold that when inflation exceeds this threshold, it will have a negative impact on
economic growth. Based on Vietnam's practice, the research team discusses the causes
of the growth differences between Vietnam and other countries and makes some policy
suggestions to improve inflation control capacity at a reasonable level. and bring into
play the positive impact that inflation can have on Vietnam's economy.
According to study of Rebeca and Marcelo (2006), This study assesses
empirically the effects of oil price shocks on the real economic activity of the main
industrialized countries. Multivariate VAR analysis is carried out using both linear and
non-linear models. The latter category includes three approaches employed in the
literature, namely, the asymmetric, scaled and net specifications. Evidence of a non-
linear impact of oil prices on real GDP is found. In particular, oil price increases are
found to have an impact on GDP growth of a larger magnitude than that of oil price
declines, with the latter being statistically insignificant in most cases. Among oil
importing countries, oil price increases are found to have a negative impact on economic
activity in all cases but Japan. Moreover, the effect of oil shocks on GDP growth differs
between the two oil exporting countries in the sample, with the UK being negatively
affected by an oil price increase and Norway benefiting from it.
Based on 2 studies we just learned, we decided to choose 5 variables for the
model, including:
Dependent variable: Y Gross Domestic Product GDP (Unit: billion USD)
Independent variables:
- Investment I (Unit: billion USD)
- Export XK (Unit: billion USD)
- Import NK (Unit: billion USD)
- Inflation L (Unit: %)

5
 Chapter 2: Research methodology and econometric model
2.1. Method Research
2.1.1 Model building method
Regression analysis method: Find the dependencies of a variable, called the
dependent variable on one or more other variables, called independent variables for the
purpose of estimating or predicting the expected value of the dependent variable. of the
foreseeable values of the independent variable, specifically in this study, analyzing the
relationship between the independent variable (Investment, Export, Import and
Inflation) and dependent variable (GDP).
2.1.2 Methods of data collection and processing
- Methods of data collection
For research and modeling purposes, the team collected samples and their
estimated values based on data of 60 observations in 2015 from 60 countries around the
world. Data of the model are cross-sectional data, collected statistically with reliable
data sources from World Bank.
- Data processing method
By estimating the coefficients of the normal minimum average model OLS, the
data is selected and checked the statistical significance of the regression coefficients
and the suitability of the model based on observations, also as compared to previous
and similar studies to find the best results to use for analysis. During the homework,
the group used the knowledge of econometrics and macroeconomics, quantitative
methods with the main support of STATA, Microsoft Excel, and Microsoft Word
software to synthesize and complete this essay.
2.2 Building econometric models
After studying and referencing studies that have been done before, our team
decided to use multiple regression analysis to find out the dependence of GDP
dependent variable for 4 independent Investment, Export, Import and Inflation for the
2015 period.
The model consists of 5 variables:
- Dependent variable: Y Gross domestic product GDP (Unit: USD)
- Independent variables:
+ Investment I (Unit: USD)
+ Export XK (Unit: USD)
+ Import NK (Unit: USD)
+ Inflation L (Unit: %)

6
2.2.1 Overall model:
Based on economic theory, to analyze the effects of factors on average life
expectancy, the group chose to study the linear regression model and take the logarithm
of the variable GDP:
Y =  +  I +  XK +  NK +  L+ ui
Inside :
• 1: Intercept factor
• 2: Angular coefficient of variable I
• 3: Angular coefficient of variable XK
• 4: Angular coefficient of variable NK
•5: Angular coefficient of variable L
• ui: Population random error corresponding to ith observation, which represents other
factors affecting GDP but not mentioned in the model.
2.2.2 A random sample regression model
= + + + + +
Inside:
: estimate of intercept
: the estimated slope of the variable I
: the estimated slope of the variable XK
: the estimated slope of the variable NK
: the estimated slope of the variable L
: remainder, estimate of random error
2.2.3 Predict expectations between variables:
- positive: An increase in investment will lead to an increase in gross domestic
product.
- positive: When the export value increases, it will lead to an increase in gross
domestic product.
- negative: When the import value increases, the gross domestic product of GDP will
decrease.
- negative: When the inflation rate increase, the gross domestic product of GDP will
decrease.
2.3 Description of the data
2.3.1. Data source
- Data found from the World Bank

7
- Sample space: The survey was conducted in 60 countries around the world, with
different levels and development histories. Therefore, we realize that this sample space
is large enough, objective and reliable enough to build up a regression model.
2.3.2. Describe the statistics
In order to help the reader have the most overview as well as give some initial
assessment, the group will describe the data before proceeding to analyze the data.
Through this description, the team is able to predict some possible errors when running
the model due to lack of data.
The figures include: Total investment capital (I), Total Export value, Total import
value, Inflation rate(L) and Gross Domestic Product (GDP) of countries in the world in
2015.
Table 2.1 Statistical description of the variables
Variable | Obs Mean Std. Dev. Min Max
-------------+---------------------------------------------------------
country | 0
gdp | 60 426.571 1524.337 .54 11061.55
investment | 60 -1.316 16.82543 -68.09 68.43
export | 60 131.025 368.2428 .36 2266.53
import | 60 164.4662 432.609 .26 2583.35
infation | 60 1.790333 5.597395 -30.24 17.15
-------------+---------------------------------------------------------

In term of Gross Domestic Production, Germany has the highest proportion in

comparing with 59 nations, being at 11%, while Dominica shows the lowest percentage
of 0.54%.
In the rate of Investment, Germany continues to have the largest percentage,
account for 68.43% when the lowest figure of -68.09% is China.
With regard to Export, China takes a lead with the highest rate at 22.6%, whereas,
Dominica continues to stand at the end with the lowest number (0.36%).
Concern about Import, China shows the biggest import rate at 25.8% compared
to the smallest figure for Gambia, being at 0.26%.
In the last category, the highest inflation rate is Ghana with 17.15% while Bahamas has
the lowest figure at -30.24%.

8
 Chapter 3: Quantitative Analysis
3.1 Regression model
Table 3.1 Regression Model
reg gdp investment export import inflation

Source | SS df MS Number of obs = 60

-------------+---------------------------------- F(4, 55) = 567.13
Model | 133847507 4 33461876.7 Prob > F = 0.0000
Residual | 3245135.9 55 59002.4708 R-squared = 0.9763
-------------+---------------------------------- Adj R-squared = 0.9746
Total | 137092643 59 2323604.11 Root MSE = 242.9

------------------------------------------------------------------------------
gdp | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
investment | -26.54081 1.923016 -13.80 0.000 -30.39462 -22.687
export | 3.382309 .274932 12.30 0.000 2.831333 3.933285
import | .3527466 .2331067 1.51 0.136 -.1144097 .819903
inflation | -4.512621 5.712118 -0.79 0.433 -15.95996 6.934719
_cons | -101.4596 35.13832 -2.89 0.006 -171.8784 -31.04083

3.2 Analyze the results after run regression model

From the regression model above, we have the following table of data:
Table 3.2 Data synthesis table from regression model
Variable t p-value Confidence Interval
_cons -101.4596 -2.89 0.006 [-171.8784; - 31.04083]
Investment -26.54081 -13.80 0.000 [-30.39462;-22.687]
Export 3.382309 12.30 0.000 [2.831333;3.933285]
Import .3527466 1.51 0.136 [-.1144097;.819903]
Inflation -4.512621 -0.79 0.433 [-15.95996;6.934719]

From the table above we have the sample regression equation SRF:
= -101.4596 + -26.5408*investment+ 3.382309*export + 0.3527466*import +
-4.512621*inflation +
The model shows that: Investment, Export, Import and Inflation have an impact on
Gross Domestic Product.
It means that the independent variable (Investment, Export, Import, and Inflation) in the
model can explain 97.63% of the variation of GDP.
So, 2.37% of the variation of GDP is explained by other variation that is excluded from
the model. By theory, they are included in .
3.3 Meaning of Partial Regression Coefficients
- For 1: When the variables Investment, Export, Import, Inflation has value equal to 0,
the average GDP is -101.4596 units, it is the average effect of other factors that are not
in the model to GDP.
- For 2: : When the factors remain constant and if the investment capital increases

9
(decreases) by 1 unit, the gross domestic product decreases (increase) 26,54081 units.
- For 3: When factors unchanged and if export increases (decreases) by 1 unit, gross
domestic product increases (decreases) 3,382309 units.
- For 4: When factors remain constant and if import increases (decreases) by 1 unit,
the gross domestic product increases (decreases) by 0.3527466 units.
- For 5: When the factors remained constant and if inflation increased (decreased) by
1 unit, the total domestic product decreased (increased) - 4.512621 units.
3.4 Check the suitability of the model
This test is to consider whether the parameters of an independent variable at the
same time equal to 0 can occur or not.
H0: R2 =0
H1: R2≠ 0
Method 1: P value method
If the Prob> F value is smaller than the significance level α = 0.05, then reject H0,
accept H1, which means the regression model is suitable
.ovtest
Ramsey RESET test using powers of the fitted values of gdp

Ho: model has no omitted variables

F(3, 52) = 234.47

Prob > F = 0.0000

Have: Prob> F = 0.0000 <0.05 Reject H0, accept H1.

Conclusion: The pattern is consistent at the 5% significance level.
Method 2: Testing overall significance of a regression
H0: R2=0
H1: R2≠0
/ . /
F= =( )/(
=514.926
( )( ) . )

Cαn-k-1= C0.0550= 2.009

Have: F = 514.926> 2.009 => Reject H0, the model is significant
3.5 Check the model's defects
3.5.1: Multicollinearity
a) Nature:
A good model is one that must achieve the BLUE (linear, unbiased, most
efficient) properties. However, in reality, due to the wrong model construction or the
nature of the data, the model does not achieve all of the above properties. One of the
problems that affects the model we call the violation of assumptions, is
10
multicollinearity. Multicollinearity is a fault of the regression analysis model that occurs
when the independent variables Xi look linearly correlated with each other.
b) The causes:
There are 3 causes of multicollinearity problem
• Perfect multicollinearity occurs when wrong model is placed. In fact, perfect
multicollinearity occurs rarely.
• Incomplete multicollinearity occurs due to the socioeconomic phenomenon that
independent variables already have collinearity relationship with each other.
• Incomplete multicollinearity occurs because the survey data are not large enough, or
the survey data are not randomized.
c) How to detect multi-collinearity
Method 1: Use the corr command to check multicollinearity.
If the independent variables are strongly correlated with each other (r> 0.8), the
multicollinearity phenomenon can occur. Using the corr command, the following output
is obtained.
corr gdp investment export import inflation

(obs=60)

| gdp invest~t export import inflat~n

-------------+---------------------------------------------

gdp | 1.0000

investment | -0.3898 1.0000

export | 0.9453 -0.1124 1.0000

import | 0.8972 -0.0732 0.9489 1.0000

inflation | 0.0071 -0.1417 -0.0197 -0.0174 1.0000

Method 2: Use the variance inflation factor (VIF).

If VIF> 10, the phenomenon of multicollinearity occurs.
Using the vif command in stata software, we obtained the following result:
vif

Variable | VIF 1/VIF

-------------+----------------------

export | 10.25 0.097566

import | 10.17 0.098337

investment | 1.05 0.955256

inflation | 1.02 0.978255

-------------+----------------------

Mean VIF | 5.62

11
 We see that all VIF values are <10, so it can be concluded that the model does
not occur multicollinearity.
Conclusion: From the two tests above, we can conclude that: The model does not occur
multi-collinearity phenomenon
3.5.2. Variable error variance
a) Nature:
Another problem that the model may face is the variance of the variance. The
consequence of the variance of variance is that the least squared estimates are still not
biased but no longer effective, and the estimates of the variances will be biased, thus
invalidating the test. This makes the model less efficient. The variance of each random
Ui, given that a given value of the explanatory variable Xi is constant, that is:
Var (Ui/Xi)= E[UI-E(Ui)]2=E(Ui)2=σ2; i=1,2,3,…n
When that assumption is violated, the model has variable variance error. The
name of this bug is Heteroskedasticity.
b) The causes:
* Due to the nature of economic phenomena: If spatial economic phenomena are
investigated on subjects of different scales or economic phenomena over time are
investigated over periods of with different fluctuations, the variance of error may be
uneven.
* Due to incorrect format of the model function. It could be due to omitting an
appropriate variable or the analysis of the function being wrong.
* Because the data does not accurately reflect the nature of the economic phenomenon,
for example, outliers appear.
* The inclusion or elimination of these observations greatly affects the regression
analysis.
* Due to the improved data collection, preservation and processing techniques, the error
tends to decrease.
c) Consequences:
If the model only has variable variance error, the OLS estimate is still an
unbiased and consistent estimate, but it is not the best estimate (the most efficient)
again. Because, the variance of error in this case cannot reach the smallest value
anymore. Then, the regression coefficients and the F-tests of the model become
unreliable. Therefore, drawing conclusions based on these tests will be inaccurate.
d) How to detect variance of variation:
First run the model regression.

12
Method 1: White test
We use the command imtest, white to test:
imtest, white

White's test for Ho: homoskedasticity

against Ha: unrestricted heteroskedasticity

chi2(14) = 58.00

Prob > chi2 = 0.0000

Cameron & Trivedi's decomposition of IM-test

---------------------------------------------------

Source | chi2 df p

---------------------+-----------------------------

Heteroskedasticity | 58.00 14 0.0000

Skewness | 11.55 4 0.0210

Kurtosis | 7.18 1 0.0074

---------------------+-----------------------------

Total | 76.73 19 0.0000

---------------------------------------------------

The test results with imtest, white command showed that Prob> chi2 = 0.0000 <0.05
Therefore, the model has variable error variance.
Method 2: Breusch-Pagan test
Executing the hettest command produces the following result:
hettest

Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance

Variables: fitted values of gdp

chi2(1) = 121.44

Prob > chi2 = 0.0000

Therefore, the model has variable error variance.

13
Method 3: Plot the error and estimated value of variable Y and observed
reg gdp investment export import inflation

Source | SS df MS Number of obs = 60

-------------+---------------------------------- F(4, 55) = 567.13

Model | 133847507 4 33461876.7 Prob > F = 0.0000

Residual | 3245135.9 55 59002.4708 R-squared = 0.9763

-------------+---------------------------------- Adj R-squared = 0.9746

Total | 137092643 59 2323604.11 Root MSE = 242.9

------------------------------------------------------------------------------

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

-------------+----------------------------------------------------------------

investment | -26.54081 1.923016 -13.80 0.000 -30.39462 -22.687

export | 3.382309 .274932 12.30 0.000 2.831333 3.933285

import | .3527466 .2331067 1.51 0.136 -.1144097 .819903

inflation | -4.512621 5.712118 -0.79 0.433 -15.95996 6.934719

_cons | -101.4596 35.13832 -2.89 0.006 -171.8784 -31.04083

------------------------------------------------------------------------------

. rvfplot, yline(0)

The blue dots in the figure represent the positions of the errors for each fitted values of
variable Y (fitted values). If the distances of these blue dots to the mean are similar, we can

14
imply that no variance occurs. However, in the figure above, the further to the right we see, the
further away the blue dots are from the mean. This implicitly signals us that a variable variance
has occurred.

Method 4: Jacque-Beratest
predict u, residual
. histogram u, normal

(bin=7, start=-810.34424, width=227.90202)

. sktest u

Skewness/Kurtosis tests for Normality

------ joint ------

Variable | Obs Pr(Skewness) Pr(Kurtosis) adj chi2(2) Prob>chi2

-------------+---------------------------------------------------------------

u | 60 0.0005 0.0001 19.91 0.0000

As-p-value= 0.0000<α=5 %

Reject Ho, u has no normal distribution

Conclusion: From the name tests, we conclude that the model has variable variance error.
3.6. Correct model errors
The above model has erroneous variance of variation, to correct the model we use the
reg, robust command as follows:
15
reg gdp investment export import inflation, robust

Linear regression Number of obs = 60

F(4, 55) = 75.59

Prob > F = 0.0000

R-squared = 0.9763

Root MSE = 242.9

------------------------------------------------------------------------------

| Robust

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

-------------+----------------------------------------------------------------

investment | -26.54081 4.72646 -5.62 0.000 -36.01285 -17.06877

export | 3.382309 .2684598 12.60 0.000 2.844304 3.920315

import | .3527466 .1825633 1.93 0.058 -.0131183 .7186116

inflation | -4.512621 2.980837 -1.51 0.136 -10.48635 1.461109

_cons | -101.4596 28.85043 -3.52 0.001 -159.2772 -43.64204

From the test of the fixed model, we see that only the import variable, inflation has
no statistically significant effect on the GDP variable in the model. We will run the new
model to test as follows:
reg gdp investment export

Source | SS df MS Number of obs = 60

-------------+---------------------------------- F(2, 57) = 1115.84

Model | 133678328 2 66839164 Prob > F = 0.0000

Residual | 3414314.59 57 59900.256 R-squared = 0.9751

-------------+---------------------------------- Adj R-squared = 0.9742

Total | 137092643 59 2323604.11 Root MSE = 244.75

------------------------------------------------------------------------------

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

-------------+----------------------------------------------------------------

investment | -26.01453 1.905834 -13.65 0.000 -29.8309 -22.19817

export | 3.779609 .0870797 43.40 0.000 3.605235 3.953983

_cons | -102.8874 33.59125 -3.06 0.003 -170.1527 -35.6221

After running the new model, the relevance of the model R 2 = 0.4742, slightly reduced
compared to the previous R2 = 0.4763. The p-value values are all less than 0.05, so the
independent variables in the model are statistically significant at the 5% significance level.

Thus, the model's variable error variance has been overcome.

16
 Conclusion
A research report on factors influencing GDP of 60 countries over the world is
completed by the knowledge contribution of five group members. The research method
of this paper is to uses stata software to analyze and measure economic relations by the
logic of data. This exercise gives us many opportunities to apply the knowledge learned
in econometrics and have a sea of chance to learn and compare in depth about the
relationships that affect GDP of 60 countries all over the world as well as the
development and creation on team work. The introductory research paper provides
background assessments of the research problem and introduces relevant problem
tissues through specific, carefully selected and accurate data. Next is the statistic
description of the variables using the sum command and quantitative analysis to
produce a concise and complete essay. The research paper is not only written on the
accumulated knowledge of the group after one semester but also completed by the
enthusiastic and dedicated teaching of teacher Dinh Thi Thanh Binh. We sincerely thank
you for imparting endless knowledge. We look forward to your comments on our
mistakes and carelessness in the article.

17
 Reference

 World Bank (WB) Website

1. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?most_recent_year_d
esc=true
2. https://data.worldbank.org/indicator/BM.GSR.TOTL.CD?most_recent_year_d
esc=false
3. https://data.worldbank.org/indicator/BX.GSR.TOTL.CD?most_recent_year_de
sc=false
4. https://data.worldbank.org/indicator/BN.KLT.DINV.CD?name_desc=true
5. https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?name_desc=false
 Econometric report (by Econometric Group, 2014)
https://www.tandfonline.com/doi/abs/10.1080/0003684042000281561?fbclid=Iw
AR32Cpmgxnb3Z-7YqttIsHcwmy3REjIFgZ10Uu7tq9Hvy47F-YKcN3fyEwM

 Oil price shocks and real GDP growth: empirical evidence for some OECD
countries (by
Rebeca Jiménez-Rodríguez & Marcelo Sánchez, 2006)
https://static-cdn.uef.edu.vn/newsimg/tap-chi-uef/2015-03-04-21/4-so-
21.pdf?fbclid=IwAR0gt78F5mkKDzHQo7Iy0rGX6kJnjUS3zngNg6gE3n7fVgFV
EdSS_P8tJHQ

18
 Appendix
 Commands and results in STATA
* Statistic description of variable:
sum gdp investment export import inflation

Variable | Obs Mean Std. Dev. Min Max

-------------+---------------------------------------------------------
gdp | 60 426.571 1524.337 .54 11061.55
investment | 60 -1.316 16.82543 -68.09 68.43
export | 60 131.025 368.2428 .36 2266.53
import | 60 164.4662 432.609 .26 2583.35
inflation | 60 1.790333 5.597395 -30.24 17.15

* Regression model:
reg gdp investment export import inflation

Source | SS df MS Number of obs = 60

-------------+---------------------------------- F(4, 55) = 567.13
Model | 133847507 4 33461876.7 Prob > F = 0.0000
Residual | 3245135.9 55 59002.4708 R-squared = 0.9763
-------------+---------------------------------- Adj R-squared = 0.9746
Total | 137092643 59 2323604.11 Root MSE = 242.9

------------------------------------------------------------------------------
gdp | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
investment | -26.54081 1.923016 -13.80 0.000 -30.39462 -22.687
export | 3.382309 .274932 12.30 0.000 2.831333 3.933285
import | .3527466 .2331067 1.51 0.136 -.1144097 .819903
inflation | -4.512621 5.712118 -0.79 0.433 -15.95996 6.934719
_cons | -101.4596 35.13832 -2.89 0.006 -171.8784 -31.04083

* P-value method
.ovtest
Ramsey RESET test using powers of the fitted values of gdp
Ho: model has no omitted variables

F(3, 52) = 234.47

Prob > F = 0.0000

* Use the corr command to check multicollinearity

corr gdp investment export import inflation

(obs=60)

| gdp invest~t export import inflat~n

-------------+---------------------------------------------

gdp | 1.0000

investment | -0.3898 1.0000

19
 export | 0.9453 -0.1124 1.0000

import | 0.8972 -0.0732 0.9489 1.0000

inflation | 0.0071 -0.1417 -0.0197 -0.0174 1.0000

* Use the variance inflation factor (VIF).

vif

Variable | VIF 1/VIF

-------------+----------------------

export | 10.25 0.097566

import | 10.17 0.098337

investment | 1.05 0.955256

inflation | 1.02 0.978255

-------------+----------------------

Mean VIF | 5.62

* White test
imtest, white

White's test for Ho: homoskedasticity

against Ha: unrestricted heteroskedasticity

chi2(14) = 58.00

Prob > chi2 = 0.0000

Cameron & Trivedi's decomposition of IM-test

---------------------------------------------------

Source | chi2 df p

---------------------+-----------------------------

Heteroskedasticity | 58.00 14 0.0000

Skewness | 11.55 4 0.0210

Kurtosis | 7.18 1 0.0074

---------------------+-----------------------------

Total | 76.73 19 0.0000

---------------------------------------------------

* Breusch-Pagan test
hettest

Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance

Variables: fitted values of gdp

chi2(1) = 121.44

Prob > chi2 = 0.0000

20
* Plot the error and estimated value of variable Y and observed
reg gdp investment export import inflation

Source | SS df MS Number of obs = 60

-------------+---------------------------------- F(4, 55) = 567.13

Model | 133847507 4 33461876.7 Prob > F = 0.0000

Residual | 3245135.9 55 59002.4708 R-squared = 0.9763

-------------+---------------------------------- Adj R-squared = 0.9746

Total | 137092643 59 2323604.11 Root MSE = 242.9

------------------------------------------------------------------------------

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

-------------+----------------------------------------------------------------

investment | -26.54081 1.923016 -13.80 0.000 -30.39462 -22.687

export | 3.382309 .274932 12.30 0.000 2.831333 3.933285

import | .3527466 .2331067 1.51 0.136 -.1144097 .819903

inflation | -4.512621 5.712118 -0.79 0.433 -15.95996 6.934719

_cons | -101.4596 35.13832 -2.89 0.006 -171.8784 -31.04083

------------------------------------------------------------------------------

. rvfplot, yline(0)

21
* Jacque-Beratest
predict u, residual
. histogram u, normal

(bin=7, start=-810.34424, width=227.90202)

. sktest u

Skewness/Kurtosis tests for Normality

------ joint ------
Variable | Obs Pr(Skewness) Pr(Kurtosis) adj chi2(2) Prob>chi2
-------------+---------------------------------------------------------------
u | 60 0.0005 0.0001 19.91 0.0000
As-p-value= 0.0000<α=5 %

* Correct model errors

reg gdp investment export import inflation, robust

Linear regression Number of obs = 60

F(4, 55) = 75.59
Prob > F = 0.0000
R-squared = 0.9763
Root MSE = 242.9

------------------------------------------------------------------------------
| Robust
gdp | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
investment | -26.54081 4.72646 -5.62 0.000 -36.01285 -17.06877

22
 export | 3.382309 .2684598 12.60 0.000 2.844304 3.920315
import | .3527466 .1825633 1.93 0.058 -.0131183 .7186116
inflation | -4.512621 2.980837 -1.51 0.136 -10.48635 1.461109
_cons | -101.4596 28.85043 -3.52 0.001 -159.2772 -43.64204

reg gdp investment export

Source | SS df MS Number of obs = 60
-------------+---------------------------------- F(2, 57) = 1115.84
Model | 133678328 2 66839164 Prob > F = 0.0000
Residual | 3414314.59 57 59900.256 R-squared = 0.9751
-------------+---------------------------------- Adj R-squared = 0.9742
Total | 137092643 59 2323604.11 Root MSE = 244.75

------------------------------------------------------------------------------
gdp | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
investment | -26.01453 1.905834 -13.65 0.000 -29.8309 -22.19817
export | 3.779609 .0870797 43.40 0.000 3.605235 3.953983
_cons | -102.8874 33.59125 -3.06 0.003 -170.1527 -35.6221

23
 Table Data
GDP Investment Export Import Inflation
Country
(billion USD) (billion USD) (billion USD) (billion USD) (%)
Afghanistan 19.90 -0.17 8.56 1.70 -0.66
Albania 11.38 -0.91 5.35 3.51 1.90
Algeria 166.36 0.64 69.89 40.10 4.78
Antigua and Barbuda 1.33 -0.99 0.96 1.03 0.97
Armenia 10.55 -0.15 4.87 4.02 3.73
Aruba 2.91 0.03 2.30 2.48 0.47
Australia 1351.69 -38.63 338.64 282.50 1.51
Austria 381.81 5.83 209.82 219.96 0.90
Azerbaijan 53.07 -0.83 21.73 21.28 4.01
Bahamas, The 11.71 -0.07 4.67 3.46 -30.24
Bahrain 31.05 3.12 26.27 27.88 1.84
Bangladesh 195.07 -2.77 48.29 35.10 6.19
Barbados 5.64 -0.36 2.74 2.63 -1.11
Belarus 56.45 -1.54 35.77 33.40 13.53
Belgium 462.14 26.84 413.73 426.80 0.56
Benin 11.38 -0.11 3.65 2.83 0.22
Bhutan 2.00 -0.01 1.37 748.14 4.55
Bolivia 33.00 -0.55 13.14 10.03 4.06
Bosnia and
16.21 -0.28 9.13 6.28 -1.04
Herzegovina
Botswana 14.42 -0.19 8.79 7.44 3.06
Brazil 1802.21 -61.64 283.35 226.12 9.03
Brunei Darussalam 12.93 -0.17 5.31 7.86 -0.49
Bulgaria 50.64 -2.07 35.25 33.50 -0.10
Burkina Faso 11.83 -0.21 4.26 2.91 0.72
Burundi 31.04 -0.04 0.85 193.49 5.54
Cabo Verde 1.59 -0.11 0.98 672.36 0.13
Cambodia 18.04 -1.73 16.87 13.64 1.22
Cameroon 30.92 -0.63 8.40 6.91 2.69
Canada 1556.12 23.92 619.87 568.47 1.13
Chile 243.91 -4.94 86.85 79.30 4.35
China 11061.55 -68.09 2266.53 2583.35 1.44
Colombia 293.48 -7.50 74.47 50.48 4.99
Congo, Dem. Rep. 37.91 -1.16 13.98 10.60 0.74
Congo, Rep. 11.95 -3.72 9.62 5.13 3.17
Costa Rica 54.77 -2.54 19.84 17.46 0.80
Cote d'Ivoire 45.81 -0.48 12.58 12.72 1.25
Croatia 49.52 -0.24 24.03 23.85 -0.46
Curacao 3.15 -0.12 2.59 2.12 -0.48

24
 GDP Investment Export Import Inflation
Country
(billion USD) (billion USD) (billion USD) (billion USD) (%)
Cyprus 19.84 15.28 44.90 45.29 -2.10
Czech Republic 188.03 2.02 158.00 158.79 0.31
Denmark 302.67 5.40 166.62 196.46 0.45
Djibouti 2.43 -0.14 3.04 3.56 -0.85
Dominica 0.54 -0.02 0.36 0.27 -0.84
Dominican Republic 71.16 -2.20 23.56 17.53 0.84
Ecuador 99.29 -1.32 25.76 21.58 3.97
Egypt, Arab Rep. 329.36 -6.74 73.27 37.87 10.37
El Salvador 23.43 -0.39 12.14 7.03 -0.73
Estonia 23.04 0.14 18.45 18.85 -0.49
Eswatini 4.06 -0.03 2.09 1.99 4.95
Ethiopia 64.58 -2.62 20.17 6.02 9.57
Fiji 4.68 -0.24 2.80 2.34 1.37
Finland 234.44 -18.12 100.78 102.00 -0.21
France 2438.20 8.40 914.86 955.75 0.04
Gabon 14.38 -0.03 5.26 5.50 -0.34
Gambia, The 1.37 0.00 0.49 0.26 6.81
Georgia 14.95 -1.41 9.83 6.95 4.00
Germany 3356.23 68.43 1468.86 1800.72 0.51
Ghana 48.56 -2.97 22.28 16.85 17.15
Greece 196.59 0.30 72.05 71.00 -1.74
Grenada 0.99 -0.13 0.63 0.52 -0.52

25