Adf test, Macroeconomics

Assignment Help:

Table Summary of results from the ADF test

Test Number

Oil

GDP

Interest rate

Inflation

Unemployment

Exchange Rate

1

1.169921

-3.4819***

-2.35867**

-2.23904**

-0.98162

-1.05852

2

0.16054

-6.0342***

-1.7243***

-3.5581***

-2.15841

-2.40748

3

-3.72037*

-6.0839***

-2.795304

-3.62005**

-1.70094

-2.67032

***/**/* - Denotes that null hypothesis can be rejected at the 1%/5%/10% significance levels respectively.Figures condensed from Appendix tables 1A -> 1F.

From Table it can be seen that the variables; Oil, GDP, interest rate and inflation are all stationary and can reject the null hypothesis at the normal significance levels. The critical values for this test are those derived by James Mackinnon (1996). Therefore they do not contain unit roots. However for the remaining two variables -exchange rates and unemployment - the null hypothesis cannot be rejected at the normal significance levels.Therefore it is confirmed that these variables are not stationary and do contain a unit root. According to Kennedy (2001) this means that the regressions for these variables will be spurious meaning that these regressions are likely to show a very high  value, indicating a strong goodness of fit. Also it might show t-statistics which deem that the coefficients are significant. However, these results may not have any economic significance at all.


Related Discussions:- Adf test

National income of india, project with introduction,aims and objectives,nee...

project with introduction,aims and objectives,need and importance,preparation of data and information,case study,problems,conclusion

Comparative advantage in cars and in rice, Suppose that in the United State...

Suppose that in the United States a car can be produced with 200 labor hours, while a ton of rice requires 20 labor hours. In Japan, it takes 150 labor hours to make a car and 50 l

Define gross requirements and scheduled receipts, One unit of A is made up ...

One unit of A is made up of one unit of B and one unit of C. B is made of three units of D and one unit if F. C is composed of three units of B, one unit of D, and four units of E.

Money, determinants of money supply

determinants of money supply

Growth, What is Bolivia''s growth in 1985?

What is Bolivia''s growth in 1985?

What is the marginal product, What is the marginal product? The margina...

What is the marginal product? The marginal product of an input is the extra quantity of output which is generated by using one more unit of which input. Marginal product of

Equilibrium in both the goods and in the money market, Equilibrium in both ...

Equilibrium in both the goods and in the money market  If both the goods- and the money markets are to be in equilibrium... ...if P increases, Y must fal

Determination of all the endogenous variables, Q. Determination of all the ...

Q. Determination of all the endogenous variables? Determination of all the endogenous variables in the AS-AD model Determination of P and Y: Prices and

Compare money with wealth and income, Compare Money with wealth and income ...

Compare Money with wealth and income Money isn't the same as wealth. An individual may be very wealthy however have no money (for instance by owning stocks and real estate). An

Income and substitution effects of a price change, Income and Substitution ...

Income and Substitution Effects of a Price Change Indifference curve analysis can be used to separate the income effect (IE) from substitution effect (SE). This is shown in Fig

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd