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2018•International Journal of Academic Research in Business and Social SciencesOpen access

Economic Analysis of Rubber Production in Malaysia Using Ardl Model

Muhammad Burhanuddin Bin Ismail, Nur Nabila Huda Aziz

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Abstract

The study applies the Autoregressive Distributed Lag (ARDL) Model approach to co-integration analysis and Error Correction Model (ECM) to examine the relationships between the explanatory variables with rubber production in Malaysia and to determine factors influencing the rubber production in Malaysia.The cumulative sum of recursive residuals (CUSUM) were used to test for structural stability of the model.The findings of the study illustrate that the ADF unit root tests indicate that the independent variables at first difference are stationary.The results of estimated long run coefficients using the ARDL Approach for the Rubber Export and Area planted are positively significant.ARDL bounds tests suggest that the independent variable series are cointegrated.The ECM also reveals that the independent variables have significant causative implications for rubber production and able to readjust 56.12% to long-run equilibrium.

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The study applies the Autoregressive Distributed Lag (ARDL) Model approach to co-integration analysis and Error Correction Model (ECM) to examine the relationships between the explanatory variables with rubber production in Malaysia and to determine factors influencing the rubber production in Malaysia.The cumulative sum of recursive residuals (CUSUM) were used to test for structural stability of the model.The findings of the study illustrate that the ADF unit root tests indicate that the independent variables at first difference are stationary.The results of estimated long run coefficients using the ARDL Approach for the Rubber Export and Area planted are positively significant.ARDL bounds tests suggest that the independent variable series are cointegrated.The ECM also reveals that the independent variables have significant causative implications for rubber production and able to readjust 56.12% to long-run equilibrium.

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Available abstract

The study applies the Autoregressive Distributed Lag (ARDL) Model approach to co-integration analysis and Error Correction Model (ECM) to examine the relationships between the explanatory variables with rubber production in Malaysia and to determine factors influencing the rubber production in Malaysia.The cumulative sum of recursive residuals (CUSUM) were used to test for structural stability of the model.The findings of the study illustrate that the ADF unit root tests indicate that the independent variables at first difference are stationary.The results of estimated long run coefficients using the ARDL Approach for the Rubber Export and Area planted are positively significant.ARDL bounds tests suggest that the independent variable series are cointegrated.The ECM also reveals that the independent variables have significant causative implications for rubber production and able to readjust 56.12% to long-run equilibrium.

Key concepts: Distributed lag, CUSUM, Autoregressive model, Econometrics, Variables, Unit root, Natural rubber, Production (economics)

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