COMPARING PARAMETRIC AND SEMIPARAMETRIC ERROR CORRECTION MODELS FOR ESTIMATION OF LONG RUN EQUILIBRIUM BETWEEN EXPORTS AND IMPORTS

This paper introduces the semiparametric error correction model for estimation of export-import relationship as an alternative to the least squares approach. The intent is to demonstrate how semiparametric error correction model can be used to estimate the relationship between Ghana’s export and import within the context of a generalized additive modelling (GAM) framework. The semiparametric results are compared to common parametric specification using the ordinary least squares regression. The results from the semiparametric and parametric error correction models (ECM) indicate that the error correction term and import variable are significant determinants of Ghana’s exports. On the basis of Akaike Information Criteria and Generalized Cross-Validation (GCV) scores, it is found that the semiparametric error correction model provides a better fit than the widely used parametric error correction model for modeling Ghana’s export-import relationship. The results of the analysis of variance provide further evidence of nonlinearity in Ghana’s export and import relationship. In effect, this paper demonstrates the usefulness of semiparametric error correction model in the estimation of export – import relationship.


Issue Date:
2017-09-01-2017-09-01-2017-09-01
Publication Type:
Journal Article
ISSN:
1789-221X
Language:
English
Published in:
APSTRACT: Applied Studies in Agribusiness and Commerce, Volume 11, Number 1-2
Page range:
19-24
JEL Codes:
C14; C18; C22; F10; F14
Note:
DOI: 10.19041/APSTRACT/2017/1-2/3




 Record created 2017-11-30, last modified 2018-01-23

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