much liquidity enters the economy. In the study it is measured as the value of annual amount of Broader (extended Money- M3). Econometric Model on the two gap model GDP = F ( Net ODA, FDI, EXCH RATE, MONEYSS…..)…………………………..11 That is mathematically, GDP is a function of Net Official Development assistance, Foreign Direct Investment, real exchange rate and money supply. The econometric model specified here is the multiple linear regression model GDP=β0 Net ODAβ1 FDIβ2EXRβ4MSβ5…………………………………………………..12 We can introduce natural logarithm function to this model and obtain the following model; InGDP = + + + + + β0 β1InNetODA β2InFDI β3InEXR β4InMS ε………………13 The are the parameters of this new model; they measure the elasticity β1, β2, β3, β4 of the ratio of GDP to the other variables in the model, is the error term of the Ԑ model and that it is normally distributed such that,Ԑ ~N(0, The introduction of the natural logarithm is for two reasons; first to have the estimates of elasticities of trade balance relative to its determinants and second, to linearize the variables. Analysis Tools and Techniques Ordinary Least Squares (OLS) Technique
much liquidity enters the economy. In the study it is measured as the value of annual amount of Broader (extended Money- M3). Econometric Model on the two gap model GDP = F ( Net ODA, FDI, EXCH RATE, MONEYSS…..)…………………………..11 That is mathematically, GDP is a function of Net Official Development assistance, Foreign Direct Investment, real exchange rate and money supply. The econometric model specified here is the multiple linear regression model GDP=β0 Net ODAβ1 FDIβ2EXRβ4MSβ5…………………………………………………..12 We can introduce natural logarithm function to this model and obtain the following model; InGDP = β0 + β1InNetODA + β2InFDI + β3InEXR + β4InMS + ε………………13 The β1, β2, β3, β4 are the parameters of this new model; they measure the elasticity of the ratio of GDP to the other variables in the model, Ԑ is the error term of the model and that it is normally distributed such that,Ԑ ~N(0, The introduction of the natural logarithm is for two reasons; first to have the estimates of elasticities of trade balance relative to its determinants and second, to linearize the variables. Analysis Tools and Techniques Ordinary Least Squares (OLS) Technique
RUKIA_CHORAY_tyr.docx