De La Salle University-Manila

School of Economics
Economics Department
GDP GROWTH:
A REGRESSION ANALYSIS ON THE FACTORS AFFECTING
GDP GROWTH IN THE PHILIPPINES
In Partial Fulfillment
To the Requirements for E!"MET #$%
Presente& to'
Dr( esar Rufino
Presente& )y'
enteno* +le,an&er M(
Decem-er ./* $0.$
.
TABLE OF CONTENTS
I. INTRODUCTION.................................................................................................................4
A. Backgroun o! "#$ S"u%..................................................................................................4
B. S"a"$&$n" o! "#$ Pro'($&................................................................................................)
C. O'*$c"+,$- o! "#$ S"u%.....................................................................................................)

D. S+gn+!+canc$ o! "#$ S"u%...................................................................................................

E. Sco/$ an L+&+"a"+on-........................................................................................................
II. RE0IEW OF RELATED LITERATURE...........................................................................1
A. Hou-$#o( o! F+na( Con-u&/"+on E2/$n+"ur$..............................................................1
B. I&/or"- o! Goo- an S$r,+c$-.........................................................................................1
C. C(a+&- on C$n"ra( Go,$rn&$n".......................................................................................3
III. OPERATIONAL FRA4EWOR5.......................................................................................6
A. 4o$( S/$c+!+ca"+on...........................................................................................................6
B. 0ar+a'($ L+-" an D$-cr+/"+on-.........................................................................................6
C. A7/r+or+ E2/$c"a"+on-.......................................................................................................89
D. Pr$-$n"a"+on o! Da"a.........................................................................................................8:
I#( 4ETHODOLOGY................................................................................................................84
0. E4PRICAL TESTING AND RESULTS DISCUSSION...................................................8)
A. OLS R$gr$--+on.................................................................................................................8)
B. T$-"+ng !or 4u("+co((+n$ar+"%.............................................................................................81
C. T$-"+ng !or H$"$ro-c$a-"+c+"%...........................................................................................86
D. T$-"+ng !or Au"ocorr$(a"+on...............................................................................................86
$
#I( CONCLUSION AND RECO44ENDATION...................................................................::
0II. BIBLIOGRAPHY.......................................................................................................:4
1
I. INTRODUCTION
A. Backgroun o! S"u%
Economics is -est &efine& as a social science or rather a science that stu&ies human -ehavior(
The su-2ect of Economics has come a lon3 4ay( The e,istence of Economics has 3iven the 4orl& a ne4
4ay to vie4 the 4orl&( It has helpe& us alon3 the 4ay of un&erstan&in3 the 4orl& that 4e live in an&
4here 4e are 4or5in3( Most of 4hat Economics has e,plore&* has -een helpin3 everyone attain
economic success( !ne e,ample is the use of the simple theory an& 3raph of supply an& &eman& of
+lfre& Marshall 6Man5i4* $0078(
It has chan3e& everyone9s lives -y usin3 economics to see if a country no4 is achievin3 3oo& -y
-ein3 a measurement to returns in a &ecision its 3overnment ma5es usin3 policies an& la4s a-out
economics( :ou cannot &eny the effect that it has 3iven to policyma5ers an& 3overnment officials( The
policyma5ers an& 3overnment officials are no4 4or5in3 to ma5e policies an& la4s that 4oul& help the
3ro4th of the economy in this country( :ou can also tell that most of those 4ho run for office are
economists tryin3 to instill economic reforms into their platforms that 4oul& affect the 3overnment an&
the country( Truth in all they 4ant to have 3oo& economic 4elfare for the country(
;ith that in min&* questions arise a-out economic 4elfare such as 5no4in3 4hat is -est 4ay to
5no4 if the economic 4elfare of a country is in a 3oo& place as of the moment( +s of to&ay economists
still ar3ue 4ith one another on 4hich is the -est &eterminant of a 3oo& or -a& economy of a country*
-ut 4hat is accepte& is usin3 <DP( )arnes 6$00=8 4rote on his article that <DP has a 4i&e covera3e of
-ein3 a &eterminant in economic output an& 3ro4th( This says that <DP is useful for overloo5in3 a lot
of factors in affectin3 the economy( ullen 6$0.$8 also states that the time <DP is 3ro4in3* inflation is
%
not a threat an& -ecause of that* the result is that 4or5ers an& -usinesses are 3enerally -etter off than
4hen it is not( This 2ust entails that 4henever <DP increases* there is a positive result on the economy
an& on the country( That coul& -e information that 4hat policyma5ers an& 3overnment officials are
&oin3* are 4hat is the result of 4hat 3oo& stan&ar& of livin3 the people of the country are 3ettin3(

The enter for the +&vancement of the Stea&y State Economy also &efines that as there is an
increase in pro&uction an& consumption of 3oo&s an& services* it coul& -e the result from increasin3
<DP an& therefore havin3 Economic 3ro4th( Increasin3 <DP 3ives Economic 3ro4th 4ith pro&uction
an& consumption of 3oo&s an& services* 3ivin3 overall pro&uctivity to the country( +lthou3h <DP
loo5s li5e it coul& -e the -est in&icator to tell economic 4elfare* it still has its fla4s -ut is the -est one
to -e use& as of present &ay(
B. S"a"$&$n" o! "#$ Pro'($&
The purpose of this paper is to see5 4hether <DP has a relationship 4ith the follo4in3
e,planatory varia-les' >ousehol& of Final onsumption E,pen&iture *Imports of <oo&s an& Services*
<ross Fi,e& apital Formation* an& laims on entral <overnment?
Do these varia-les help e,plain ho4 <DP an& the country attain economic 4elfare an&
economic sta-ility?
C. O'*$c"+,$- o! "#$ S"u%
The o-2ectives of this paper are the follo4in3'
.( To construct a econometric mo&el that 4ill -e relevant to society for the use of <DP to4ar&s
@
the Philippines an& also to analyAe results from the re3ression(
$( To &etermine 4hether >ousehol& of Final onsumption E,pen&iture *Imports of <oo&s an&
Services* <ross Fi,e& apital Formation* an& laims on entral <overnment are si3nificant
in&icators for <ross Domestic Pro&uct in the Philippines -y usin3 econometric theories an&
principles(
1( To 3ive an insi3ht on 4hat the Philippines can possi-ly &o in or&er to increase <DP
D. S+gn+!+canc$ o! "#$ S"u%
Durin3 the .
st
quarter of the year* the Philippines has 3arnere& a B(/C 3ro4th in $0.1( This
sho4s that the Philippines is &oin3 3oo& economic activity an& that the performance of manufacturin3
an& construction institutions are the -ac5-one of that increase in economic 3ro4th( +ccor&in3 to
Presi&ential ommunications Development an& Strate3ic Plannin3 Secretary Ramon aran&an3* D!ur
challen3e is to sustain the 3ro4th an& ensure that all Filipinos feel its positive effects(E +n& that is 4hy
this stu&y 4ill -e si3nificant -ecause it 4ill share a vie4 on ho4 <DP can -e attaine& -y usin3 the
e,planatory varia-les liste&( This coul& also help the 3overnment esta-lishments 3et economic
&evelopment( The varia-les liste& coul& -e focuse& on if si3nificant to <DP as it is(
E. Sco/$ an L+&+"a"+on-
The main source of the &ata use& for this is from ;orl& )an5 from years .=/0-$0.0 statin3 it is
a time-series &ata 4ith 10 years( The &ata is specifically have the settin3 on the Philippines( +nnual
&ata 4as o-taine& for each varia-le that is 3oin3 to -e use& for the stu&y(
This stu&y analyAes 4hether factors such as >ousehol& of Final onsumption E,pen&iture
*Imports of <oo&s an& Services* an& laims on entral <overnment are contri-utory to <DP(
7
II. RE0IEW OF RELATED LITERATURE
A. Hou-$#o( o! F+na( Con-u&/"+on E2/$n+"ur$
+ccor&in3 to ;orl& )an5* >ousehol& final consumption e,pen&iture 6private consumption8 is
the mar5et value of all 3oo&s an& services* inclu&in3 &ura-le pro&ucts 6such as cars* 4ashin3 machines*
an& home computers8* purchase& -y househol&s( This varia-le is a representation of consumer
spen&in3 throu3h out annually for the 4hole country 4ith 3oo&s an& services( )ut 4ith all consume&
3oo&s -ein3 part of final consumption* there is an e,ception 4ith purchases* o4n-construction or
improvements of resi&ential housin3 -ecause they are treate& as part of 3ross capital formation 6#u
Fuan3 #iet* $0..8(
+ccor&in3 to !ED* >ousehol& final consumption e,pen&iture is typically the lar3est
component of final uses of <DP* representin3 in 3e-neral aroun& 70C of <DP( It is therefore an
essential varia-le for economic analysis of &eman&( ;e can see here that >ousehol& final consumption
has a -i3 relationship 4ith <DP( +s >ousehol& of final consumption e,pen&iture increases* <DP
increases as 4ell( This varia-le 4as formerly 5no4n as private consumption an& -ase& on a stu&y in
)el3ium* private consumption is half the reason 4hy there 4as 3ro4th in )el3ium 6v( )au3net G
I( Dresse* $0..8
B. I&/or"- o! Goo- an S$r,+c$-
+ccor&in3 to ;orl& )an5* Imports of 3oo&s an& services represent the value of all 3oo&s an&
other mar5et services receive& from the rest of the 4orl&( They inclu&e the value of merchan&ise*
frei3ht* insurance* transport* travel* royalties* license fees* an& other services* such as communication*
construction* financial* information* -usiness* personal* an& 3overnment services( They e,clu&e
B
compensation of employees an& investment income 6formerly calle& factor services8 an& transfer
payments( )ut remin&er that 4e are not loo5in3 at the 4hole 4orl& -ut loo5in3 at the imports of 3oo&s
an& services 4ithin the Philippines(
+ccor&in3 to the stu&y of Mali5 +AiA-ur-Rehman +tif 6$0.$8* the effect on the 3ro4th of
imports of 3oo&s an& services on <DP 3ro4th is also positive sho4in3 there is a positive relationship(
These results 4ere ta5en from &ata of Pa5istan( Imports of 3oo&s an& services are an essential
component of computin3 for <DP(
C. C(a+&- on C$n"ra( Go,$rn&$n"
+ccor&in3 to ;orl& )an5* laims on central 3overnment inclu&e loans to central 3overnment
institutions net of &eposits( +nother &efinition -y the IMF states that* laims on the central
3overnment* net is &efine& as the central 3overnments &irect financial o-li3ations to the country9s
financial institutions less any claims the central 3overnment has on those institutions( This 2ust means
that there are those &e-ts on the 3overnment that has a ne3ative relationship 4ith <DP(
+ccor&in3 to a stu&y -y EliAa-eth Ho4als5i 6$0008* &ue to hi3h levels of 3overnment &e-t this
is usually a -i3 si3n of a financial or economic pro-lem 4ith the economy( The stu&y &isplays ne3ative
correlations 4ith <DP(
/
III. OPERATIONAL FRA4EWOR5
A. 4o$( S/$c+!+ca"+on
GDPgrowth=0 + 1housefinalcomexp + 2impofgoodandserv + 3claicengov+ U
B. 0ar+a'($ L+-" an D$-cr+/"+on-
T4o 5in&s of varia-les 4ill -e use&' the &epen&ent or en&o3enous varia-le an& the in&epen&ent
varia-le or e,o3enous varia-le( En&o3enous varia-les are varia-les 4hich can -e affecte& -y the
e,o3enous varia-les in a mo&el(
0ar+a'($ D$!+n"+on
<DP3ro4th -En&o3enous varia-le in the mo&el
-quantitative measurements of <DP annually for
the country of the Philippines for the years of
.=/0-$0.0
housefinalcome,p -E,o3enous varia-le in the mo&el
-quantitative measurement of househol&s final
comsumption e,pen&iture for the country of the
Philippines for the years of .=/0-$0.0
-the mar5et value of all 3oo&s an& services*
inclu&in3 &ura-le pro&ucts 6such as cars* 4ashin3
machines* an& home computers8* purchase& -y
=
househol&s(
impof3oo&an&serv -E,o3enous varia-le in the mo&el
-quantitative measurement of imports of 3oo&s
an& services for the country of the Philippines for
the years of .=/0-$0.0
-represent the value of all 3oo&s an& other mar5et
services receive& from the rest of the 4orl&(
claicen3ov -E,o3enous varia-le in the mo&el
-quantitative measurement of claims on the central
3overnment for the country of the Philippines for
the years of .=/0-$0.0
These varia-les are to -e teste& to see if there is a relationship -et4een <DP3ro4th as the
&epen&ent varia-le an& housefinalcome,p* impof3oo&an&serv* claicen3ov as the in&epen&ent varia-les
for the mo&el
C. A7/r+or+ E2/$c"a"+on-
The varia-les housefinalcome,p* impof3oo&an&serv* claicen3ov as the in&epen&ent varia-les
for the mo&el for the country of the Philippines 4ill -e treate& si3nificant until &isproven in the
&iscussion of the paper later( +-priori e,pectations are hypothesis of relationships -et4een varia-les
that are sai& to -e true( The -asis of the +-priori 4ill -e from the revie4 of relate& literature &iscusse&
a-ove( )y usin3 a al3e-raic si3n 4ill sho4 the &irection of the relationship -et4een the in&epen&ent
an& &epen&ent varia-le(
.0
0ar+a'($ A(g$'ra+c S+gn A7/r+or+ E2/$c"a"+on
housefinalcome,p 6I8 positive >ousehol&s final consumption
e,pen&iture has a positive
relationship to <DP3ro4th is
-ecause increasin3 consumption
4ill lea& to pro&uction causin3
economic 3ro4th to follo4(
Usin3 also the e,pen&iture
approach in attainin3 <DP
6:JIII<I6K-M8* 4e can say
that consumption increases : in
the same sense
impof3oo&an&serv 6-8 ne3ative Imports of 3oo&s an& services
have a ne3ative relationship 4ith
<DP3ro4th -ecause as a country
imports more of 3oo&s an&
services then costs increase
rather than havin3 e,ports 4ere
profits an& 3ain are attaine&(
Usin3 also the e,pen&iture
approach in attainin3 <DP
6:JIII<I6K-M8* 4e can say
that imports &ecrease : in the
..
same sense
claicen3ov 6-8 ne3ative laims on entral <overnment
has a ne3ative relationship 4ith
<DP3ro4th -ecause the intuition
here is that* as the &e-ts an&
loans of the central 3overnment
increase there is no room for
3ro4th as there are lia-ilities in
the presence(
D. Pr$-$n"a"+on o! Da"a
The &ata 4as attaine& from ;orl& )an5 only focusin3 on the country of the Philippines for 10
years from .=/0-$0.0(
Y$ar GDPgro;"# #ou-$!+na(co&$2/ +&/o!gooan-$r
,
c(a+c$ngo,
.=/0 @(.%/=..$=%B %(@0B77=7=./ $/(%B.0=..71@ $(@/@$7=1B@7
.=/. 1(%$1$7=.BB/ $(7@@B1@B$%= $B(.B.@@0B1$1 %(.1.0@@%07@
.=/$ 1(7.=1$B70@/ 1(%@/%%%$@.7 $7(.1@/B==77. 7(=1B0.B/==@
.=/1 .(/B%7.7%7// 0(70/.=B$B7B $/(0/..1$.$.@ 7(%=7B%B$=.$
.=/% -B(1$17/$@/@/ 0($77/./0.$B $@(0B1.7B@7=@ %(@=B1077B0/
.=/@ -B(10770//1%= -.(.@=0/%771B $.(/=1%7%$$$7 %(0100$0.$7@
.=/7 1(%.7B/$/01@ 1(1$$B01@=7B $$(1B%%10B$17 B(@0117$7=$=
.=/B %(1..71%/.=B %(0%.0$/=%11 $7($$.1@=07% .(117B@B7%=/
.=// 7(B@$@%%%/$= 7($$/10=%@$@ $7(=1=0%@.B1B -0(./%7///%%1
.=/= 7($0@1....@= @(0070.1B=$$ 10($7/%=/.%B= -0(.@71/=B=B/
.==0 1(017=77$=1% @(1/0/=.1$@= 11($/%0%0@@=1 0(17@/%11@7B
.$
Y$ar GDPgro;"# #ou-$!+na(co&$2/ +&/o!gooan-$r
,
c(a+c$ngo,
.==. -0(@B/11%7@.@ $($@=7.@0$1 1$(@/B7=1@1/ -.(@7$@@/1%$/
.==$ 0(11B70101$% 1($@//07B%0= 1%(0$/./@$$=. -$(@10..@$$$@
.==1 $(..710B.B=7 1(0%./01%$7. 1=(/07/@BB.. .7(0707=$.B1@
.==% %(1/B7$111/= 1(B.//B%B.0B %0(.11/7$%1@. .@(=7%1.@.7%@
.==@ %(7B/7=$$$. 1(/.$%=1.$7$ %%(./.$@.$%=% .@(11.7..1@/1
.==7 @(/%@/B1%B.B %(7$1B07/10/ %=($=1$=/B%7@ .%(B..7$%0/$1
.==B @(./@17$$B%7 %(==0$@B@=/1 @=($=1/1@% .B(0%%/7$./BB
.==/ -0(@B7B$$./=$ 1(%%7=%@@71$ @1(/=/0.%/BB7 .1(71%/7.B1%%
.=== 1(0/.=$7B71/ %(0$/$71B1%/ %=(%$0.@00$%$ .1(@@%@1=1%$1
$000 %(%..$.$@0B7 @(.=B.01%7$@ @1(170@770$// .1(0=B0$%11$.
$00. $(/=1==$%.0% %(0/%7@/.00@ @$(//$0/=01%= .@(.7=%0$$@%/
$00$ 1(7%@/=/.1=/ @(.0/@%B$/B @@(7//0B@.1. .7(017B7$7B$.
$001 %(=B0171B1.@ @(%=%1=00%@@ @%(7=$$B/$@%7 .@(.77@.=@BB%
$00% 7(7=B717%$7$ @(=B07=%@..7 @%(07=/B$$@$7 .7($7/.7B%00$
$00@ %(BBB771%70/ %(%$%@@11/.7 @.(B%.@7%%%$% .$(B11$/%=.1.
$007 @($%$=@10%0% %(./$.B@$B$$ %/(17$B7=00$= .$($1$$//.B=1
$00B 7(7.777/@0%@ %(70=7B0%.BB %1(1@/7.07% ..(@.$@1@$$@7
$00/ %(.@$B@B.%@B 1(7B=/7B@$/B 1=(1B0$$70%0$ ..(7$1707$.B7
$00= .(.%/110%0/= $(111.7$%71@ 11(1@/01..@%= .$($1...1$=$$
$0.0 B(71$$7%0=@1 1(1@0@00%@=/ 17(7.7.=B$=$7 .$(@1$B%.0B@=
.1
0. 4ETHODOLOGY
The researcher uses soft4are pro3rams specialiAin3 in estimation calle& ST+T+ an& <RETL in
appro,imatin3 the coefficients of the in&epen&ent varia-les(
The mo&el that 4ill -e use& is of the lin-lin type( !r&inary Least Squares 4ill -e the metho& of
estimation applie&(
+ re3ression 4ill -e &one an& the mo&el 4ill un&er3o an& -e su-2ecte& for various tests( The
tests are the test for multicollinearity* test for heterosce&acity* test for autocorrellation an& test for
mispesification( To test for multicollinearity* the variance inflation factor 6#IF8 4ill -e use&( +n& for
heterosce&asticity* there 4ill -e the ;hiteLs Test to improve the certainty of results ( To test for
autocorrellation the )reusch-<o&frey an& the Du-in ;atson 4ill -e use&( Lastly* for mispesification*
4ith the Ramsey RESET test( If there are violations present in the mo&el* proper reme&ial measures
shall -e &one(
.%
0I. E4PRICAL TESTING AND RESULTS DISCUSSION
A. OLS R$gr$--+on
The re3ression results of the mo&el are sho4n -elo4( !-taine& usin3 !r&inary Least Squares
estimation metho&( Re3ressin3 <DP3ro4th a3ainst the e,planatory varia-les ha& the follo4in3 results(

.@
The re3ression has provi&e& actual values for the un5o4n parameters( Usin3 the operational
frame4or5 mo&el an& the primary !LS re3ression 4e attain this equation'
GDPgrowth=.8118424+2.11814housefinalcomexp!.1"2#$impofgoodandserv+.2#%&8claicengov
+ u
"e,t thin3 4e loo5 at the re3ression is the p-value an& the R-square& values -ecause the p value
&etermines the statistical si3nificance of the parameter an& the R-square& is the percent that e,plains
the re3ression in itself( It tal5s a-out the e,planatory po4er of the estimate& mo&el(
The R-square& value of the mo&el is 0(B@1@ or B@(1@00C 4hich is nearer to . or .00C( Since
the value is hi3h* this means that the estimate& mo&el is po4erful in e,plainin3 effects of the re3ressors
on the re3ressan&( This level of R-square& also tells us that the &ata fits pretty 4ell for the sample
re3ression( The a&2uste& R-square& value is near to 0(B@1@ or B@(1@00C 4hich is (B$7. or B$(7.00C
as sho4n a-ove(
The coefficient of househol&s final consumption e,pen&iture is $(../@.%* si3nifyin3 that as
househol&s final consumption e,pen&iture increases -y . unit* then <DP3ro4th 4ill increase -y
appro,imately $(../@.%( This proves that the a-priori e,pectation for the varia-le is correct an& can -e
e,plaine& -y economic intuition( It also seen si3nificant -y loo5in3 at its p-value 4hich is equal to
0(000 4hich satisfies the con&ition 4here the p-value must -e less than or equal to the level of
si3nificance of 0(0@ to -e seen as a relevant varia-le for the mo&el
For imports of 3oo&s an& services* the coefficient is -(.@=$@71* si3nifyin3 that as imports of
.7
3oo&s an& services increases -y . unit* then <DP 3ro4th 4ill &ecrease -y appro,imately (.@=$@71(
This also proves that the a-priori e,pectation for the varia-le is correct an& can -e e,plaine& -y
economic intuition( It is also seen si3nificant as its p-value 4hich is equal to 0(00B 4hich satisfies the
con&ition 4here the p-value must -e less than or equal to the level of si3nificance of 0(0@ to -e seen as
a relevant varia-le for the mo&el(
Lastly* the claim on central 3overnment coefficient is ($@7@B0/* si3nifyin3 that as the claims on
central 3overnment increases -y . unit* <DP 3ro4th increases -y appro,imately ($@7@B0/( This one on
the contrary &oes not a3ree 4ith its a-priori( This result su33ests that economic 3ro4th 4ill* ho4ever*
increase as 3overnment &e-t increases( Unfortunately* this result is counter-intuitive an& not as
e,pecte&( 6Ho4als5i* $0008 The same result came upon the stu&y that it 4as counter-intuitive an& 4as
a3ainst the i&ea of havin3 more &e-ts 4ill &ecrease <DP( The cause of this mi3ht -ecause of other
factors not -ein3 inclu&e& in the re3ression( Despite that* It is also seen si3nificant as its p-value 4hich
is equal to 0(00B 4hich satisfies the con&ition 4here the p-value must -e less than or equal to the level
of si3nificance of 0(0@ to -e seen as a relevant varia-le for the mo&el(
It is nice to 5no4 that all of them are si3nificant an& that this mo&el has value( $ out of 1 3o
alon3 4ith their a-priori e,pectation( It also seen that all of them have 1 stars 4hich 3ives hi3h
si3nificance statistically(
B. T$-"+ng !or 4u("+co((+n$ar+"%
Multicollinearity is one of the re3ression mo&el violations( It is 4hen the e,o3enous varia-les
have a perfect or imperfect linear relationship( Multicollinearity can cause 4eir& results 4hen
attemptin3 to stu&y ho4 4ell in&ivi&ual in&epen&ent varia-les contri-ute to an un&erstan&in3 of the
.B
&epen&ent varia-le( That is 4hy 4hen a violation comes alon3* as much as pro-lem resolve it alrea&y
-ut it &oes not mean that a violation of is totally 4ron3 -ut to see ho4 severe the violation is -ecause
estimates coul& still -e )LUE(
To test multicollinearity* variance inflation factor 6#IF8 4as use& on -oth <RETL an& ST+T+(
In this test the #IF shoul& not e,cee& or -e equal to .0 an& that multicollinearity is tolera-le -elo4 .0(
The Stata result is sho4n a-ove sayin3 none of the values e,cee& .0 an& that the mean #IF isalso less
than .0 4hich is $(B1(
>ere are the results from <RETL'
./
+s you can see they are all near to Aero 4hich means they are tolera-le 4ith multicollinearity
4hithin the &ate* an& &oes not nee& to -e resolve& or fi,e&(
C. T$-"+ng !or H$"$ro-c$a-"+c+"%
>eterosce&asticity is 4here there is no homosce&asticity( There 4ill -e -iase& inference 4hich
3ives out more &an3er than 4hat multicollinearity can -e tolera-le a-out -ecause if this test is violate&
then the mo&el 4ill not -e )LUE anymore(
This is the test result usin3 ST+T+'
Since the p-value is equal to 0($=@% 4hich is more than the si3nificant level of 0(0@* then 4e
can sat that the mo&el is not violatin3 heterosce&asticity(
D. T$-"+ng !or Au"ocorr$(a"+on
+utocorrelation is a violation 4hich mean that the errors are correlate& an& thus violatin3 this
4ill ma5e the re3ression or !LS is no lon3er )LUE or the )est Linear Un-iase& Estimator(
To &etect if there is a violation in the mo&el* usin3 the pro3ram ST+T+ an& <RETL 4e test the
.=
)reusch-<o&frey test an& the Dur-in-;atson Test
>ere are the results of <RETL'
>ere are the results from ST+T+'
The results from the )reusch-<o&frey test from -oth <RETL an& ST+T+ have a p-value hi3her
$0
than 0(0@ 4hich mean there is no autocorrelation in the mo&el( The results coul& also -e sai& the same
a-out the results of the Dur-in-;atson Test* that conclu&es there is no autocorrelation in the mo&el(
$.
#II( CONCLUSION AND RECO44ENDATION
To attain the ans4ers to the pro-lems state& at the -e3innin3 of the paper* 4e loo5 into the
re3ression an& its si3nificance( +ccor&in3 to the re3ression * the si3nificant factors that affect <DP
3ro4th are >ousehol&s final consumption e,pen&iture* Imports of 3oo&s an& services* an& laims on
central 3overnment( >ousehol&s final consumption e,pen&iture have a positive an& &irect relationship
meanin3 that 4hen >ousehol&s final consumption e,pen&iture increases 4oul& lea& to an increase in
<DP 3ro4th( Imports of 3oo&s an& services have an in&irect or ne3ative relationship meanin3 that
4hen imports of 3oo&s an& services increases * it 4oul& result to a &ecrease in <DP 3ro4th( laims on
central 3overnment has a contra&ictory to its a-priori that it shoul& -e ne3atively relate& to4ar&s <DP
<ro4th as the same stu&y -y EliAa-eth Ho4als5i* in her 4or5 DDeterminants of Economic <ro4th in
East +sia' +Linear Re3ression Mo&el states that it 4as une,pecte& to have this 5in& of results ( This
can also -e the result -ecause of its relationship 4ith 3overnment investment( +s the &e-ts increase
-ecause from loanin3 then economic 3ro4th coul& -e seen if -orro4in3 involve& for pro&uction an&
economic pro3ress purposes( 6Ho4als5i* $0008
The mo&el is 3oo& in estimatin3 the amount of <DP 3ro4th 4hen >ousehol&s final
consumption e,pen&iture* imports of 3oo&s an& services* an& claims on central 3overnment chan3es(
The re3ression mo&el sho4s that they are all si3nificant in&epen&ent varia-les
For policyma5er an& 3overnment official recommen&ations* 4e can see that in all the varia-les
the hi3hest coefficient 4as from househol&s final consumption e,pen&iture an& that shoul& -e the focus
since it also has a positive relationship 4ith <DP 3ro4th( There shoul& -e la4s that coul& help
househol&s final consumption e,pen&iture to increase( )ut 4e shoul& also loo5 into ho4 inflation an&
$$
interest rates coul& ta5e in effect 4ith the population an& coul& in&ue influence on ho4 consumers of
househol&s consume(
For researchers recommen&ations* this is only for the country of the Philippines an& coul& not
-e feasi-le 4ith all countries( The o-servations if increase& coul& chan3e the results for &ifferent
countries an& for &ifferent re3ions( I also su33est to loo5 for &ifferent factors that 4oul& affect <DP
3ro4th* to see if there are more factors that are si3nificant to <DP 3ro4th( Loo5 also into ho4 claims
on central 3overnment 4oul& -e contra&ictory to its economic intuition of havin3 ne3ative relationship
4ith <DP 3ro4th( Researchers shoul& also loo5 into more &ata a-out the topic an& repeat the
re3ression analysis -efore recommen&in3 &ecisions to ma5e policys an& la4s to policyma5ers an&
3overnment officials
$1
0II. BIBLIOGRAPHY
!ED 6$0.08* "ational +ccounts at a <lance $00=* !ED Pu-lishin3(
&oi' .0(.B/BM=B/=$7%07B=/.-en
Ho4als5i 900* EliAa-eth* EDeterminants of Economic <ro4th in East +sia' + Linear Re3ression
Mo&elE 6$0008( >onors Pro2ects( PaperB%(http'MM&i3italcommons(i4u(e&uMeconNhonpro2MB%
Diola* amille * an& Louis )acani ( EPhilippines9 B(/C 3ro4th in F. outperforms peers* hina(E
Retrieve& from PhilStar(com "(p(* 10 May $0.1( Retrieve& from
Ohttp'MM444(philstar(comM-usinessM$0.1M0@M10M=%/.0.Mphilippines-B(/-3ro4th-q.-outperforms-
peers- chinaP(
<DP 3ro4th Q Data Q Ta-le(Data | The World Bank( Retrieve& Decem-er .B* $0.1* from
http'MM&ata(4orl&-an5(or3Min&icators
>ousehol&s Final onsumption E,pen&iture Q Data Q Ta-le(Data | The World Bank( Retrieve& Decem-er
.B* $0.1* from http'MM&ata(4orl&-an5(or3Min&icators
Imports of <oo&s an& Services Q Data Q Ta-le(Data | The World Bank( Retrieve& Decem-er .B* $0.1*
from http'MM&ata(4orl&-an5(or3Min&icators
laims on entral <overnment Q Data Q Ta-le(Data | The World Bank( Retrieve& Decem-er .B* $0.1*
from http'MM&ata(4orl&-an5(or3Min&icators
allen* T( 6$0.$* March $/8( <ross Domestic Pro&uct' +n EconomyLs +ll - )ac5 to )asics' Finance G
Development(Finance & Development( Retrieve& Decem-er .7* $0.1* from
http'MM444(imf(or3Me,ternalMpu-sMftMfan&&
;hy Stu&y Economics?( 6n(&(8( Qeen!" #conomic" Department( Retrieve& Decem-er .B* $0.1* from
http'MM444(econ(queensu(caMaca&emicsMu
)arnes* R( 6$00=* Fe-ruary $@8( Economic In&icators' <ross Domestic Pro&uct 6<DP8( $nve"topedia(
$%
Retrieve& Decem-er .7* $0.1* from http'MM444(investope&ia(comMuniversityMrelease
#iet* Fuan3 #u 6$0..* +pril $B8( Measurement of <DP -y final e,pen&iture approach' an
intro&uction(International ;or5shop on Measurin3 <DP -y Final Deman& +pproach( Retrieve&
from http'MMunstats(un(or3Muns&MeconomicNstatMhinaM<DPFEMMeasurin3C$0<DPC$0-y
C$0finalC$0e,pen&itureC$0approach-anC$0intro&uction(p&f
enter for the +&vancement of Stea&y State Eonomy( D<DP an& In&icators of Economic ;ell-ein3R(
Retrieve& from http'MMstea&ystate(or3M4p-contentMuploa&sM+SSEN)riefN<DP(p&f
+tif* Mali5 +AiA ur-Rehman 6$0.$* Decem-er8(Impacts of Imports* E,ports an& Forei3n Direct
Investment on the <ross Domestic Pro&uct 6<DP8 <ro4th( Retrieve& from
http'MMc3r(umt(e&u(p5Mico-m$0.1MpapersMPapersMI1-Dec-$0.$-0%1(p&f
#()au3net GL&resse 6$0..8( Developments in private consumption over the past three years( Retrieve&
from http'MM444(n--(-eM&ocMtsMpu-licationsMEconomicRevie4M$0..MecorevII$0..N>1(p&f
<i-escu* !ctavia 6$0.0* March8 Does the 3ross fi,,e& capital formation represent a factor for
supportin3 the economic 3ro4th? Retrieve& from
http'MMmpra(u-(unimuenchen(&eM@0.1@M.MMPR+NpaperN@0.1@(p&f
<u2arati* D(* G Porter* D( 6$00=8( Ba"ic #conometric" Fi%th #dition& Sin3apore' Mc<ra4>illMIr4in(
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