Faculty of social studies department of economics supply response of tobacco output to price changes in

Table 3: Results for unit root test at first difference
Variable
ADF
test
Critical
Critical value
Critical value
Decision statistic value at at at 10%
dln(TOUT
t
)
-6.52*
-2.63
-1.95
-1.61
I(1)
dln(TOUT
t-1
)
-5.83*
-2.63
-1.95
-1.61
I(1)
*(**) [***] means stationary at 1 % (5 %) [10 %] level, d means first difference, Ii meansi
order of integration
18

4.3 Model Diagnostic Tests Results
Table 4: Correlation Matrix Results
Variable dln(TOUT
t-1
)
ln(PT
t-1
)
ln(MP
t-1
)
ln(ATG
t
)
SQ
t-1
T
dln(TOUT
t-1
)
1
ln(PT
t-1
)
0.27 1
ln(MP
t-1
)
-0.01 0.54 1
ln(ATG
t
)
-0.08 0.12 0.17 1
SQ
t-1
-0.03 0.04
-0.16
-0.15 T 0.07 0.58 0.17
-0.55 Table 4 presents the correlation matrix showing the degree of linear association between a pair of regressors. The correlation coefficients are less than 0.8 implying that each variable’s effect on the dependent variable can easily be isolated. The model does not suffer from serious problems of multicollinearity, therefore the OLS approach can be used for estimation.

Download 1.11 Mb.

Share with your friends: