centeno,alexander 11148691 econmet final paper

8/11/2019 Centeno,Alexander 11148691 Econmet Final Paper

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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

centeno,alexander 11148691 econmet final paper

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