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

Climate and terrain in several south american countries, Climate and terrai...

Climate and terrain in several South American countries are conducive to growing coffee efficiently. While other countries can grow coffee, they are not as efficient and effective

What are between material and non-material progress, What are between mater...

What are between material and non-material progress? • Material progress considers to as economic growth. Growth is only one dimension of development. Growth doesn’t unavoidab

Enumerate in detail about the financial markets, The Government, Rest of th...

The Government, Rest of the World and the financial markets Total expenditure of the government may be divided into two parts: transfers to the private sector and consumpti

Firm''s output at various levels of employment, Use the following data for ...

Use the following data for a firm's output at various levels of employment (L) to calculate: a) its marginal physical product of labor (MPPL) schedule; (b) its (MPPL/MRCL) schedule

Consumer increases her purchases of compact disks, Suppose a consumer's inc...

Suppose a consumer's income increases from $30,000 to $36,000. As a result, the consumer increases her purchases of compact disks (CDs) from 25 CDs to 30 CDs. What is the consumer'

Survivor Island, the central economic problem facing the group of survivors...

the central economic problem facing the group of survivors

Macro, Over long spans of time, macroeconomies typically grow, but over sho...

Over long spans of time, macroeconomies typically grow, but over short spans there are fluctuations in output and prices known as ____ ?

Explain the facts or economics rate, Explain the facts or economics rate ...

Explain the facts or economics rate Boom: The period leading up to the peak of the cycle when an overheating economy is experiencing high GDP growth and inflationary pressures

Monetrary policy, draw a diagram that explains how interest rate sare deter...

draw a diagram that explains how interest rate sare determined in the keynesian macroeconomic model

Macroeconomic variables, What are the trends of labour and capital as macrf...

What are the trends of labour and capital as macrfoeconomics variables?

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