granger causality test, Microeconomics

(Granger, 1969, 1988), where it can be addressed in terms of a VAR (vector auto regression) system. If an export platform is important for the country, FDI inflows should result in an increase in export flows from the host country. Therefore, Granger causality could be used to examine whether FDI Granger inflows cause export flows.

The direction of the Granger causality is sensitive to the number of lags; therefore, it is important to use the Akaike Information Criterion (AIC) (Akaike, 1974) to suggest the use of the lag with the lowest computed AIC value. The AIC is defined as: ln AIC = [ 2k/n] + ln [ RSS/n] where k is the number of regressors, n is the number of observations, and RSS is the residual sum of squares.

For FDI and exports and FDI and imports, the Granger causality test is applied based on a stationary dataset. Hence, it is necessary to establish the stationarity properties of the data, and unit root analysis is conducted for this purpose.  If an export platform is important for the country, the result will indicate an increase in export flows from the technology sector. Therefore, Granger causality could be used to examine whether FDI Granger inflows cause export flows or import substitution from the technology sector. The direction of the Granger causality is sensitive to the number of lags; therefore, it is important to use the Akaike Information Criterion (AIC) (Akaike, 1974) to suggest the use of the lag with the lowest computed AIC value. Given a data set, several competing models may be ranked according to their AIC, with the one having the lowest AIC being the best.

 

Posted Date: 2/26/2013 1:02:52 AM | Location : United States







Related Discussions:- granger causality test, Assignment Help, Ask Question on granger causality test, Get Answer, Expert's Help, granger causality test Discussions

Write discussion on granger causality test
Your posts are moderated
Related Questions
I need help finding the future worth given the initial investment, MARR, and profit over a period of time.

Are markets the best way of solving the basic economic problem? Justify your answer. The core of the economic problem ( who, what, for whom) is something all societies must add

what is microeconomics

Q. Asymmetric Information - Insurance Markets? In the United States, health insurance is usually provided for employees through contracts between the insurance company and thei

hoe does the knowledge of price elasticity of demand important to the government

Aggregate Supply When referred to in the circumstance of GNP or GDP, aggregate supply refers to the labor and capital needs to proceeds the level of products and services need

using ? tools of economic highlight on comsumption

explain the concept of producers'' equilibrium

Hi, Can you help with writing journals homework? It should be in english as a second language. Ten pages different topics about Karl Marx economics views. I will give you the t

How to solve general equilibrium in pure exchange economy with 2 consumer and 3 commodities