A simultaneous equation model is said to be identified if we can obtain unique estimates of the coefficients in the model. The equations in identified models have a unique structure…
The OLS and other single equation models assume that variables treated as independent variables are exogenous. This implies a one-way relationship between independent and dependent variables. It is assumed that…
The Adjusted R square addresses the drawback of the R square by penalising the inclusion of additional independent variables. As a result, this ensures that additional unnecessary variables are not…
The R square and Adjusted R square are often used to assess the fit of the Ordinary Least Squares model. These measures, therefore, help ascertain how well the estimated model…
The OLS or Ordinary Least Squares is one of the most widely used models in Econometrics and many other fields. Therefore, the interpretation of coefficients is one of the most…
OLS or Ordinary Least Squares is one of the most common methods used in Econometrics. It is a linear regression technique that minimizes the sum of squared residuals (error term)…
Vector Autoregression or VAR can be estimated using several packages. We will use the "vars" and "tsDyn" packages to illustrate the application of VAR in R. In addition, we will…
There are several packages available for estimating the ARIMA and SARIMA in Rstudio. Autoregressive Integrated Moving Average (ARIMA) and Seasonal Autoregressive Integrated Moving Average (SARIMA) models are often used for…
After estimating Ordinary Least Squares or OLS in Rstudio, we must ensure that the model is a good fit. The model must satisfy the assumptions of OLS including heteroscedasticity, no…
The method of Ordinary Least Squares (OLS) is one of the basic types of analysis in Econometrics. It is widely used in other fields of study as well. R programming…
Simon Kuznets observed a relationship between inequality and development which came to be known as the Kuznets Inverted-U hypothesis. He postulated that inequality in income distribution will rise during the…
Similar to the Lewis Model, the structural change theory by Fei and Ranis attempts to explain the transition of underdeveloped agricultural economies with surplus labour into industrialised economies. Furthermore, the…
Nobel Laureate Arthur Lewis introduced a model of structural change in the 1950s. The Lewis Model of Structural Change focussed on the structural transformation of a subsistence agricultural economy with…
Ragnar Nurkse introduced the concept of the vicious circle of poverty. Many other economists have further developed it. It attempts to shed light on the reasons behind the underdevelopment of…
Over the past decades, the definition and understanding of the term ‘development’ have dramatically changed. The three core values of development by Denis Goulet represent that change in how we…
