Simultaneous Equations Modeling: Examining The Relationship Between Money Wages, Labor, And Gross National Income In Jordan (2006-2022).
Keywords:
Structural Equations, 2, Simultaneous Equations, 3, Money Wages, Least Squares, 4, Two Stage Weighted Least Squares, 5, Two Stage Least Square
Abstract
This study delves into the structural simulation equations influencing the interrelation between W (money wages) and GNU (Gross National Income) simultaneous equations. The variables encompassed in both models include W, GNU, P, R, L, M, and the unemployment ratio, with all variable data expressed in percentage ratios, except for GNU, which is in millions J.D. The dataset draws from various sources, primarily relying on the Central Bank of Jordan's annual reports and I.M.F. reports spanning 2006–2022. Employing weighted least squares, two-stage least squares, the instrumental method, and Anova, the study scrutinizes the simultaneous equation models to ensure their fit to the data.
In this analytical framework, the structural equations of GNU involve both current and ratio values of affected variables in the structural models of GNU, with predictors and instrumental explanations including W, P, unemployment ratio, R, M, and L. The R-squared value for this model is 97.6%, indicating strong explanatory power. However, despite the high R-squared value, it is noteworthy that not all explanatory variables exhibit complete utility. In the TSLS (two-stage least squares) model, where the dependent variable is W (money wages), the predictors include the Unemployment ratio, P, R, M, GNU, and L. The R-squared in this model is 93.8%, revealing significant relationships between W, P, Unemployment ratio, and M. Notably, we deem the impact of GNU as not significant, suggesting it does not exert a substantial influence on money wages.
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2. Hausman, Jerry A., Whitney K. Newey, and William E. Taylor. (1987). Efficient Estimation and Identification of Simultaneous Equations Models with Covariance Restrictions. Econometrica, 55, 849-874.
3. Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366), 427-431.
4. Dickey, D. A., & Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica, 49(4), 1057-1072.
5. Barro, R.J. (1990). Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98, S103-S125.
6. Folster, S., and M. Henrekson. (2001). Growth effects of government expenditure and taxation in rich countries. European Economic Review, 45, 1501-1520.
7. Girma, S. (2003). Absorptive Capacity and Productivity Spillovers from FDI: a threshold regression analysis. European Economic Group, Working Paper 25/2003.
8. Landau, D. (1983). Government Expenditure and Economic Growth: Across-Country Study. Southern Economic Journal, 49(3), 783-92 January.
9. Kormendi, R., and Meguire, P. (1985). Macroeconomic Determinants of Growth: Cross-country evidence. Journal of Monetary Economics, 16, 141-164.
10. Hsieh, E., and Lai, K.S. (1994). Government Spending and Economic Growth: The G-7 Experience. Applied Economics, 26(ISS 51), 535-542.
11. Kaufmann, D., Kraay, A., and Mastruzzi, M. (2003). Governance Matters III: Governance Indicators for 1996-2002. World Bank Policy Research Working Paper No. 3106, June 2003.
12. Mishra, V., Barrere, B., Hong, R., & Khan, S. (2008). Evaluation of bias in HIV seroprevalence estimates from national household surveys. Sexually Transmitted Infections, 84(Suppl 1), i63–i70.
13. Mishra, V., Vaessen, M., Boerma, J., Arnold, F., Way, A., Barrere, B., Cross, A., Hong, R., & Sangha, J. (2006). HIV testing in national population-based surveys: experience from the Demographic and Health Surveys. Bulletin of the World Health Organization, 84(7), 537–545.
14. Mishra, S.K. (2016a). Shapley Value Regression and the Resolution of Multicollinearity. Journal of Economics Bibliography, 3(3), 498-515.
15. Nakamura A. and Nakamura M. (1983). Part-time and full-time work behavior of married women: A model with a doubly truncated dependent variable. Canadian Journal of Economics, May, 229-257.
16. Adoghor, G. J., Onuchukwo, O., and Ewubare, D.B. (2008). Principles of Economics: A contemporary approach. Port Harcourt: Pearl Publishers.
17. Koutsouyiannis, A. (2003). Theory of Econometrics. New York: Palgrv.
18. Sakib B. A. (2011). The causal relationship between consumption expenditure and economic growth in Bangladesh. World Journal of Social Sciences, 1(2), 158-169.
19. Tapsin G., & Hepsag A. (2014). An analysis of household consumption expenditure in EA-18. European Scientific Journal, 10(16), 1-12.
20. Zhang, S H; Terao, H; Ueno, M; Fujita, K. (1991). Dynamic performances of tractor-trailer combinations for farm use (IV). Introduction of state equations and dynamic characteristics. Journal of the Japanese Society of Agricultural Machinery, 53(3), 15-23.
21. Alvarez, J., and M. Arellano. (2003). The time series and cross-section asymptotics of dynamic panel data estimators. Econometrica, 71, 1121-1159.
22. Anderson, T.W., and C. Hsiao. ( 1982). Formulation and estimation of dynamic models using panel data. Journal of Econometrics, 18, 47-82.
23. Anderson, T.W., and H. Rubin. (1949). Estimation of the parameters of a single equation in a complete system of stochastic equations. Annals of Mathematical Statistics, 20, 46-63.
24. Arellano, M. (2003). Panel Data Econometrics. Cambridge University Press.
25. Hsiao, C. (1983). Identification, in Handbook of Econometrics vol 1, edited by Z. Griliches and M. Intriligator, pp. 223-283. Amsterdam.
26. Hsiao, C. (2003). Analysis of Panel Data. Cambridge University Press.
27. Hsiao, C., Pesaran, M.H., and K. Tahmiscioglu. (2002). Maximum likelihood estimation of fixed effects dynamic panel data models covering short periods. Journal of Econometrics, 109, 107-150.
28. Hsiao, C., and J. Zhang. (2013). IV, GMM, or Likelihood approach to estimate dynamic panel models when either N or T or both are large, working papers.
29. Bende-Nabende A., and Ford J.L. (1998). FDI, Policy Adjustments and Endogenous Growth, Multiplier Effects from a Small Dynamic Model for Taiwan, 1959-1995. World Development, 26, 1315-30.
30. OECD (2000). Main Determinants and Impacts of Foreign Direct Investment on China’s Economy. Working Papers on International Investment, Directorate For Financial, Fiscal and Enterprise Affairs, Number 2000, 4.
31. Andrei, T., Bourbonnais, R. (2008). Econometrie. Editura Economică, Bucureşti.
32. Andrei, T., Matei, A., Oancea, B., (2009). Simultaneous Equations Models Used in the Study of Some Issues Related to the Corruption and Performance of Services in the Public Health System. Theoretical and Applied Economies, Vol. XVI, No. 1(530), pp. 3 – 18. Available at SSRN: http://ssrn.com/abstract=1333528.
33. Girma, S. (2003). Absorptive Capacity and Productivity Spillovers from FDI: a threshold regression analysis. European Economic Group, Working Paper 25/2003.
34. Kormendi, R., and Meguire, P. (1985). Macroeconomic Determinants of Growth: Cross-country evidence. Journal of Monetary Economics, 16, 141-164.
35. Kneller, R., M. Bleaney and N. Gemmel (1998). Growth, Public Policy and the Government Budget Constraint: Evidence from OECD Countries. Discussion Papers in Economics, DP 98/14, Adler, M., & Lehmann, B. (1983). Deviation from PPP in the long run. Journal of Finance, 50(38), 1971-1987, University of Nottingham.
36. Chortareas, G., & Kapitanios, G. (2013). How puzzling is the PPP puzzle? An alternative half-life measure of convergence to PPP. Journal of Applied Econometrics, 28(3), 435-457. http://dx.doi.org/10.1002/jae.2261.
37. Girard, A. and P. Rakotonjanahary (2006). Le Rapport Annuel Aux Actionnaires: En Voie De Disparition?. In Comptabilité et Connaissances (pp. CD-Rom).
38. Grier, K.B. and Tullock, G. (1989). An empirical analysis of cross-national economic growth, 1951-80. Journal of Monetary Economics, 24(2), 259-76.
39. Akekere, J., & Yousuo, P.O.J. (2010). Empirical analysis of change in income on private consumption expenditure in Nigeria from 1981 to 2010. International Journal of Academic Research in Business and Social Sciences, 2(12).
40. Adoghor, G. J., Onuchukwo, O., & Ewubare, D. B. (2008). Principles of Economics: A contemporary approach. Port Harcourt: Pearl Publishers.
Published
2024-05-30
How to Cite
Prof. Dr. Mohammad M. Alaya. (2024). Simultaneous Equations Modeling: Examining The Relationship Between Money Wages, Labor, And Gross National Income In Jordan (2006-2022). Revista Electronica De Veterinaria, 25(1S), 196-206. Retrieved from https://veterinaria.org/index.php/REDVET/article/view/600
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Articles
