The Importance Of Time Series Data In Research

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This research uses time series data and we will see the population from a time base rather than cross-sectional items. We will be adopted a sample size for this study which covers the period 1961 to 2012. This period is adopted because of the non-availability of complete data. The study will be sourced data from published annual reports of Ministry of Finance and economic cooperation (MoFEC).
The methods of data analysis involve the use of descriptive statistics and correlation matrix test which helps in describing the nature of our data. In testing the hypothesis, the use of econometric techniques will employed as unit root test – ADF and co-integration test will be conducted. Co-integration test will be used to examine the stable long
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This occurs when the regression results reveal a high and significant relationship among variables when in fact, no relationship exist.
Moreover, Stock and Watson (1988) have also shown that the usual test statistics (t, F, DW, and
R2) will not possess standard distributions if some of the variables in the model have unit roots.
Therefore, it is necessary to test for time series variables before running any sort of regression analysis.
3.3 Error Correction Model
This study will be adopted the Error correction model as suggested by Gujarati (2009) in examining the long-run and short-run dynamic relationship in equation (1) and (2). This includes the error correction coefficient (β) and short run coefficient (ά) which measures the long-run and short-run relationship between the dependent variable and the independent variables. This therefore necessitates the need to re-specify both equation (1) and (2) in an error correction model form as;
Model 1: GSIS t= ά0 +ά1 VAt + ά2EXt + ά3EMPt + ά4FDIt + β5ecm (-1) + ἑt-------equation (3)
Dependent Variables;
GSIS = growth rate share of Industry sector. This represents the historical annually Industry sector growth series for the period of 1961 to 2012 in Ethiopia.
Independent Variables:
ΔVA = Value added is direct proxy for industry sector. It is measured the incremental difference in the rate of return in industry sector for the period of 1961 to 2012 in Ethiopia.
ΔEX = Export performance is
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