Econometrics Paper - Thailand
ECONMET C32 : Final Paper
For this final paper, I was tasked to look at the Thailand’s time series data to examine the relationship between the Current Account Balance in USD as the dependent variable, and the average exchange rate, USD to 1 Thai Baht and Gross Fixed Capital Formation in Constant 2000 USD as the independent variables.
i.) Data of the Current Account Balance in USD (Y), and the average exchange rate, USD to 1 Thai Baht (X1) and Gross Fixed Capital Formation in Constant 2000 USD. See Appendix A.
ii.) Standard Regression Function – See Appendix B. ← The standard regression function for the current account balance will be: current account balance = 33.15782 – 727.4281 (average exchange rate) – 2.49 x 10-10. (gross fixed capital formation). This is a Lin-Lin model where units for each variable are concerned. Also, current account balance is the dependent variable and average exchange rates and gross fixed capital formation are the independent variables. ← The β1, or the intercept of the regression is 33.15782. The slope coefficients of both independent variables both resulted to a negative value. Therefore, there is an indirect relationship that exists between the current account balance and average exchange rate, and the current account balance and the gross fixed capital formation. β2, or the slope coefficient of X2, is –727.4281, which means that a unit increase in the average exchange rate would decrease the current account balance by –727.4281. β3, or the slope coefficient of X3, is –2.49 x 10-10, which means that a unit increase in the gross fixed capital formation would decrease the current account balance by –2.49 x 10-10.
Tests: ← Individual Test of Significance for Average Exchange Rate: Ho: β2 = 0 H1: β2 ≠ 0 CR: 2.052 < T < -2.052 TS: [pic][pic] Decision: T falls under the CR; therefore, the average exchange rate is individually significant.
← Individual
For this final paper, I was tasked to look at the Thailand’s time series data to examine the relationship between the Current Account Balance in USD as the dependent variable, and the average exchange rate, USD to 1 Thai Baht and Gross Fixed Capital Formation in Constant 2000 USD as the independent variables.
i.) Data of the Current Account Balance in USD (Y), and the average exchange rate, USD to 1 Thai Baht (X1) and Gross Fixed Capital Formation in Constant 2000 USD. See Appendix A.
ii.) Standard Regression Function – See Appendix B. ← The standard regression function for the current account balance will be: current account balance = 33.15782 – 727.4281 (average exchange rate) – 2.49 x 10-10. (gross fixed capital formation). This is a Lin-Lin model where units for each variable are concerned. Also, current account balance is the dependent variable and average exchange rates and gross fixed capital formation are the independent variables. ← The β1, or the intercept of the regression is 33.15782. The slope coefficients of both independent variables both resulted to a negative value. Therefore, there is an indirect relationship that exists between the current account balance and average exchange rate, and the current account balance and the gross fixed capital formation. β2, or the slope coefficient of X2, is –727.4281, which means that a unit increase in the average exchange rate would decrease the current account balance by –727.4281. β3, or the slope coefficient of X3, is –2.49 x 10-10, which means that a unit increase in the gross fixed capital formation would decrease the current account balance by –2.49 x 10-10.
Tests: ← Individual Test of Significance for Average Exchange Rate: Ho: β2 = 0 H1: β2 ≠ 0 CR: 2.052 < T < -2.052 TS: [pic][pic] Decision: T falls under the CR; therefore, the average exchange rate is individually significant.
← Individual