Following the analysis performed, the coefficients of the endogenous variables
are statistically significant at a level of confidence of 95%.
The statistical qualities of the model, such as the strong interdependence between exogenous and endogenous variables
, support this methodological approach and suggest that OCA theory can provide relatively strong support for the calculation of modified OCA indexes (Skorepa, IES 2011, and Finance a liver 2013).
Annual data is employed for the following endogenous variables
(1) Current account as % of GDP, (2) Output gap as % of potential output, and (3) Real effective Exchange rate misalignment
In essence, we apply the Granger causality (GC) concept to investigate the empirical relations between current and lagged endogenous variables
and the relative predictive ability of each set of lagged endogenous variables
This means that the model structure contains only endogenous variables
(except the deterministic components of the model), with their maximum delay time being the same.
Each empirical model is developed by trial and error method accommodating exogenous and endogenous variables
and also by observing goodness-of-fit values of the models and consistency with real life expected scenario.
Empiricists: Convinced that observation is our only tool against economic ignorance, empiricists are certain that the only defensible theoretical propositions are those derived from discerning patterns whereby changes in exogenous variables constantly precede changes in endogenous variables
, thus establishing empirically (for example, through Granger tests) the direction of causality.
Some studies treat car ownership and travel distance as the endogenous variables
explained by sociodemographics and built environment [1, 16], while other studies consider them as the exogenous variables to explain mode choice behavior [4, 17].
where [y.sub.t] = ([y.sub.1t],[y.sub.2t], ..., [y.sub.kt])' is a vector of K observable endogenous variables
Basist and [S.sup.PLS] are endogenous variables
and c([tau]) is the N-dimensional intercept term vector at the level of division [tau] = ([[tau].sub.1],[[tau].sub.2]).