Data and Methodology in Brazil

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Recommended: Merits and demerits of fiscal policy

Data and Methodology This section will project the parameters of the economic models through its data sources, sample size, and evidently the estimation techniques. This chapter consists of two parts. The first part will introduce the variables together with the reasoning of their selection. The second part will test the variables through hypothesis testing to ensure a fair degree of adequacy for regression analysis. Model Specification The study adopts a comparative approach to examine the effectiveness of fiscal policy in stimulating economic growth under periods of high and/or low economic activity in Brazil. This analysis will initiate a Dicky-Fuller test and Augmented Dicky-Fuller test to ensure adequate data before performing the (OLS) regression. Secondary data will be collected from World Bank before being computed on E-views (Econometric software). Hypothesis testing will be validated through the tau test, to assert the significance of the regression coefficients. (Gujurati 2003), F-test for the overall significance of the model (Patterson and Okafor 2007); (R2) provides information about the goodness of fit of a model (Gujurati 2003) and (Adjusted R2) features the overall improvement in significance of the models when new terms are being introduced or removed. The empirical and theoretical literature review establishes the effective key fiscal and non-fiscal components of economic growth based on economic theories. All seven variables analysed in the literature review are assumed to be the contributors of Brazil’s economic growth. This study will therefore use all these explanatory variables to show their effectiveness to the economy, however in case of strong collinearity, one or two variables will be d... ... middle of paper ... ...drains, and so on); plant, machinery, and equipment purchases; and the construction of roads, railways, including schools, offices, hospitals, private residential dwellings, commercial, industrial buildings and net acquisitions of valuables are also considered capital formation. (Carvalho 2010) claims the “Growth Acceleration Plan” (refer to Appendix C) has been Brazil’s key contributors to economic growth. Urbanisation (% of Population) Urban population refers to people living in urban areas as defined by national statistical offices. It is calculated using World Bank population estimates and urban ratios from the United Nations World Urbanization Prospects. (Galor, Oded, and David N. Weil. 2000.) Develops a unified growth model that captures the historical evolution of population and technology producing output growth. This is thoroughly discussed in Appendix B.

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