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Chapter 5

The document presents a statistical analysis using Stata on the relationship between GDP, CPI, and imports (IMP) based on data from an Excel file. Key findings include a strong positive correlation between log_IMP and log_GDP, while log_CPI shows no significant influence from log_GDP. The analysis concludes that only imports significantly explain variations in CPI, while GDP does not.

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8 views5 pages

Chapter 5

The document presents a statistical analysis using Stata on the relationship between GDP, CPI, and imports (IMP) based on data from an Excel file. Key findings include a strong positive correlation between log_IMP and log_GDP, while log_CPI shows no significant influence from log_GDP. The analysis concludes that only imports significantly explain variations in CPI, while GDP does not.

Uploaded by

laibaadeelnasir
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Question : 5.

. use "H:\sem 8\economertics\data sets\imports_uk2.xls", clear


file H:\sem 8\economertics\data sets\imports_uk2.xls not Stata format
r(610);

. import excel "H:\sem 8\economertics\data sets\imports_uk2.xls",


sheet("imports_uk2") firstrow

. summarize

Variable | Obs Mean Std. Dev. Min Max


-------------+--------------------------------------------------------
obs | 0
CPI | 46 134.5261 18.61501 100.3 163.2
GDP | 74 87.4 11.60373 69.4 108.6
IMP | 74 40409.49 11282.9 22833 65406
PPI | 74 78.64324 17.5245 45.6 104.4

. gen log_GDP = log(GDP)

. gen log_IMP = log(IMP)

. gen log_CPI = log(CPI)


(28 missing values generated)

. regress log_GDP log_IMP log_CPI

Source | SS df MS Number of obs = 46


-------------+------------------------------ F( 2, 43) = 787.50
Model | .198587855 2 .099293928 Prob > F = 0.0000
Residual | .005421757 43 .000126087 R-squared = 0.9734
-------------+------------------------------ Adj R-squared = 0.9722
Total | .204009612 45 .004533547 Root MSE = .01123

------------------------------------------------------------------------------
log_GDP | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_IMP | .4253118 .0218192 19.49 0.000 .3813092 .4693144
log_CPI | -.0068936 .0238409 -0.29 0.774 -.0549732 .0411861
_cons | .0122103 .1442798 0.08 0.933 -.2787576 .3031783
------------------------------------------------------------------------------

. correlate log_IMP log_CPI log_GDP


(obs=46)

| log_IMP log_CPI log_GDP


-------------+---------------------------
log_IMP | 1.0000
log_CPI | 0.8746 1.0000
log_GDP | 0.9866 0.8594 1.0000

. regress log_GDP log_IMP

Source | SS df MS Number of obs = 74


-------------+------------------------------ F( 1, 72) = 5376.63
Model | 1.30838112 1 1.30838112 Prob > F = 0.0000
Residual | .017520924 72 .000243346 R-squared = 0.9868
-------------+------------------------------ Adj R-squared = 0.9866
Total | 1.32590204 73 .018163042 Root MSE = .0156

------------------------------------------------------------------------------
log_GDP | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_IMP | .4711678 .0064257 73.33 0.000 .4583584 .4839772
_cons | -.5174972 .0679287 -7.62 0.000 -.6529106 -.3820838
------------------------------------------------------------------------------

. regress log_IMP log_CPI

Source | SS df MS Number of obs = 46


-------------+------------------------------ F( 1, 44) = 143.20
Model | .861981266 1 .861981266 Prob > F = 0.0000
Residual | .264846461 44 .006019238 R-squared = 0.7650
-------------+------------------------------ Adj R-squared = 0.7596
Total | 1.12682773 45 .025040616 Root MSE = .07758

------------------------------------------------------------------------------
log_IMP | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_CPI | .9556597 .0798592 11.97 0.000 .794714 1.116605
_cons | 6.083147 .3908238 15.56 0.000 5.295493 6.870801
------------------------------------------------------------------------------

. regress log_CPI log_GDP

Source | SS df MS Number of obs = 46


-------------+------------------------------ F( 1, 44) = 124.32
Model | .697100738 1 .697100738 Prob > F = 0.0000
Residual | .246723904 44 .005607361 R-squared = 0.7386
-------------+------------------------------ Adj R-squared = 0.7327
Total | .943824643 45 .020973881 Root MSE = .07488

------------------------------------------------------------------------------
log_CPI | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_GDP | 1.848513 .1657883 11.15 0.000 1.514388 2.182637
_cons | -3.526345 .7550835 -4.67 0.000 -5.048115 -2.004574
------------------------------------------------------------------------------

. regress log_GDP log_IMP log_CPI

Source | SS df MS Number of obs = 46


-------------+------------------------------ F( 2, 43) = 787.50
Model | .198587855 2 .099293928 Prob > F = 0.0000
Residual | .005421757 43 .000126087 R-squared = 0.9734
-------------+------------------------------ Adj R-squared = 0.9722
Total | .204009612 45 .004533547 Root MSE = .01123

------------------------------------------------------------------------------
log_GDP | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_IMP | .4253118 .0218192 19.49 0.000 .3813092 .4693144
log_CPI | -.0068936 .0238409 -0.29 0.774 -.0549732 .0411861
_cons | .0122103 .1442798 0.08 0.933 -.2787576 .3031783
------------------------------------------------------------------------------
. vif

Variable | VIF 1/VIF


-------------+----------------------
log_CPI | 4.25 0.235037
log_IMP | 4.25 0.235037
-------------+----------------------
Mean VIF | 4.25

Question 5.2

. summarize

Variable | Obs Mean Std. Dev. Min Max


-------------+--------------------------------------------------------
obs | 0
cpi | 46 134.5261 18.61501 100.3 163.2
gdp | 74 87.4 11.60373 69.4 108.6
imp | 74 40409.49 11282.9 22833 65406
ppi | 74 78.64324 17.5245 45.6 104.4

. gen log_cpi = log(cpi)


(28 missing values generated)

. gen log_gdp = log(gdp)

. gen log_imp = log(imp)

. correlate log_gdp log_cpi log_imp


(obs=46)

| log_gdp log_cpi log_imp


-------------+---------------------------
log_gdp | 1.0000
log_cpi | 0.8594 1.0000
log_imp | 0.9866 0.8746 1.0000

. regress log_cpi log_imp log_gdp

Source | SS df MS Number of obs = 46


-------------+------------------------------ F( 2, 43) = 70.15
Model | .722421206 2 .361210603 Prob > F = 0.0000
Residual | .221403437 43 .005148917 R-squared = 0.7654
-------------+------------------------------ Adj R-squared = 0.7545
Total | .943824643 45 .020973881 Root MSE = .07176

------------------------------------------------------------------------------
log_cpi | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_imp | .9186299 .4142501 2.22 0.032 .0832149 1.754045
log_gdp | -.2815064 .9735676 -0.29 0.774 -2.244893 1.68188
_cons | -3.708873 .7282251 -5.09 0.000 -5.177479 -2.240267
------------------------------------------------------------------------------

. reg log_imp log_gdp

Source | SS df MS Number of obs = 74


-------------+------------------------------ F( 1, 72) = 5376.63
Model | 5.81575286 1 5.81575286 Prob > F = 0.0000
Residual | .077880493 72 .001081674 R-squared = 0.9868
-------------+------------------------------ Adj R-squared = 0.9866
Total | 5.89363335 73 .080734703 Root MSE = .03289

------------------------------------------------------------------------------
log_imp | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_gdp | 2.09434 .0285622 73.33 0.000 2.037403 2.151278
_cons | 1.22346 .1274916 9.60 0.000 .9693098 1.477609
------------------------------------------------------------------------------

. reg log_imp log_cpi

Source | SS df MS Number of obs = 46


-------------+------------------------------ F( 1, 44) = 143.20
Model | .861981266 1 .861981266 Prob > F = 0.0000
Residual | .264846461 44 .006019238 R-squared = 0.7650
-------------+------------------------------ Adj R-squared = 0.7596
Total | 1.12682773 45 .025040616 Root MSE = .07758

------------------------------------------------------------------------------
log_imp | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_cpi | .9556597 .0798592 11.97 0.000 .794714 1.116605
_cons | 6.083147 .3908238 15.56 0.000 5.295493 6.870801
------------------------------------------------------------------------------

. c

Source | SS df MS Number of obs = 46


-------------+------------------------------ F( 1, 44) = 124.32
Model | .15067974 1 .15067974 Prob > F = 0.0000
Residual | .053329873 44 .001212043 R-squared = 0.7386
-------------+------------------------------ Adj R-squared = 0.7327
Total | .204009612 45 .004533547 Root MSE = .03481

------------------------------------------------------------------------------
log_gdp | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
log_cpi | .3995598 .0358355 11.15 0.000 .3273381 .4717815
_cons | 2.599445 .1753756 14.82 0.000 2.245998 2.952891
------------------------------------------------------------------------------

. vif

Variable | VIF 1/VIF


-------------+----------------------
log_cpi | 1.00 1.000000
-------------+----------------------
Mean VIF | 1.00
Correlation Matrix
log_gdp & log_cpi: Correlation = 0.8594 → High correlation suggests potential
multicollinearity.

log_gdp & log_imp: 0.9866 → Strong positive relationship.

log_cpi & log_imp: 0.8746 → Also a strong positive relationship.


R² = 0.7654 → 76.5% of variation in CPI explained by IMP and GDP.

log_imp: t = 2.22, p = 0.032 → Statistically significant at 5% level.

log_gdp: t = -0.29, p = 0.774 → Not significant, suggests weak influence.

Conclusion: Only imports explain CPI here; GDP does not.

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