Economic Growth and Development in Ethiopia by Almas Heshmati & Haeyeon Yoon

Author:Almas Heshmati & Haeyeon Yoon
Language: eng
Format: epub
Publisher: Springer Singapore, Singapore

4

0.32029

0.0270

3.76

4

0.32029

0.0270

3.76

5

0.00075

–

–

5

0.00075

–

–

*shows the number of cointegrating vectors. It indicates at least three (3) cointegrating vectors are available using the trace statistics test

Source Authors’ computation using Stata 13 software

Granger causality test

We also applied the Granger causality test to know the direction of causality and the behavior of the variables in the current period and also to forecast growth in the long-run.

As shown in Table 6.11, the direction of causality was based on probability values. We made use of the 0.05 level of significance in deciding the direction of causality. So, from the first equation, economic services expenditure, social services expenditure, general services expenditure and other services expenditure did not Granger cause real GDP individually or jointly at lag three.Table 6.11Granger causality Wald tests results

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