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Effectiveness of a Cluster of Determinants to Increase Economic Growth Rate: A Combined Statistical Criteria Approach

Author

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  • Chee Yin Yip

    (Department of Economics, Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia)

  • Hock Eam Lim

    (College of Arts and Sciences (Economics), Universiti Utara Malaysia, Malaysia)

  • Hooi Hooi Lean

    (Economics Program, School of Social Sciences, Universiti Sains Malaysia, 11800 USM, Penang, Malaysia)

Abstract

This paper attempts to estimate the effectiveness of a cluster of determinants to increase gross domestic product (GDP) growth rate by using a combined statistical criteria approach. First, combining three ranking measures i.e., partial regression coefficients, adjusted R2 and Bayesian information criterion (BIC) into one single ranking procedure for finding and ranking the impact of each determinant - Y-procedure. Second, ranking the effectiveness of a cluster of determinants, each of which has been Y-procedure ranked using F-statistics, adjusted R2 and BIC in increasing GDP growth rate - Y-average. The results show that sets of top five or more variables should be considered as one entity with respect to increasing GDP growth rate, and the degree of effectiveness increases if their Y-average of relative measures increases. On application of this Y-procedure and Y-average to Australian GDP growth rate, it is found that investment, current account balance, gross foreign liability, export and import have the highest impact and thus, these five variables should be given priority when constructing the relevant economic policies and allocation of funds towards increasing GDP growth rate specifically for the case of Australia

Suggested Citation

  • Chee Yin Yip & Hock Eam Lim & Hooi Hooi Lean, 2016. "Effectiveness of a Cluster of Determinants to Increase Economic Growth Rate: A Combined Statistical Criteria Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 728-735.
    • Handle: RePEc:eco:journ1:2016-02-49
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    References listed on IDEAS

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    More about this item

    Keywords

    Prioritize; Allocation; Ranking Measures; Y-procedure; Y-average;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General

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