What's the use of '% to GDP' type of variables?
$begingroup$
In my study I will look for the relationship between the Gini coefficient and trade, FDI and other variables. However, as I was regressing it... the result turn out to be insignificant. My data that I used then were 'trade as a percentage to GDP' and 'FDI as a percentage to GDP'.
On the other hand, when I regress it with just the total of trade and FDI... it brings a somewhat significant result.
Can I drop the 'as a perentage of GDP'? And just use the total trade and FDI without that?
Plus I only have 16 years worth of data, though.
macroeconomics regression
edited 2 days ago
Peter Mortensen
1072
asked Mar 31 at 16:19
ryleg96ryleg96
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In my study I will look for the relationship between the Gini coefficient and trade, FDI and other variables. However, as I was regressing it... the result turn out to be insignificant. My data that I used then were 'trade as a percentage to GDP' and 'FDI as a percentage to GDP'.
On the other hand, when I regress it with just the total of trade and FDI... it brings a somewhat significant result.
Can I drop the 'as a perentage of GDP'? And just use the total trade and FDI without that?
Plus I only have 16 years worth of data, though.
macroeconomics regression
edited 2 days ago
Peter Mortensen
1072
asked Mar 31 at 16:19
ryleg96ryleg96
112
New contributor
ryleg96 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
$endgroup$
add a comment |
$begingroup$
In my study I will look for the relationship between the Gini coefficient and trade, FDI and other variables. However, as I was regressing it... the result turn out to be insignificant. My data that I used then were 'trade as a percentage to GDP' and 'FDI as a percentage to GDP'.
On the other hand, when I regress it with just the total of trade and FDI... it brings a somewhat significant result.
Can I drop the 'as a perentage of GDP'? And just use the total trade and FDI without that?
Plus I only have 16 years worth of data, though.
macroeconomics regression
edited 2 days ago
Peter Mortensen
1072
asked Mar 31 at 16:19
ryleg96ryleg96
112
New contributor
ryleg96 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
$endgroup$
In my study I will look for the relationship between the Gini coefficient and trade, FDI and other variables. However, as I was regressing it... the result turn out to be insignificant. My data that I used then were 'trade as a percentage to GDP' and 'FDI as a percentage to GDP'.
On the other hand, when I regress it with just the total of trade and FDI... it brings a somewhat significant result.
Can I drop the 'as a perentage of GDP'? And just use the total trade and FDI without that?
Plus I only have 16 years worth of data, though.
macroeconomics regression
macroeconomics regression
edited 2 days ago
Peter Mortensen
1072
asked Mar 31 at 16:19
ryleg96ryleg96
112
New contributor
ryleg96 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 2 days ago
Peter Mortensen
1072
asked Mar 31 at 16:19
ryleg96ryleg96
112
New contributor
ryleg96 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited 2 days ago
Peter Mortensen
1072
edited 2 days ago
Peter Mortensen
1072
edited 2 days ago
Peter Mortensen
1072
1072
asked Mar 31 at 16:19
ryleg96ryleg96
112
New contributor
ryleg96 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked Mar 31 at 16:19
ryleg96ryleg96
112
asked Mar 31 at 16:19
ryleg96ryleg96
112
112
New contributor
ryleg96 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
ryleg96 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
ryleg96 is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
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2 Answers
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Imagine that I am trying to determine whether eating corn has any effect on your height. I see that in the US, total corn consumption is 20 million tons per year (made up number, all others will be made up as well) and adding up the heights of the 300 million citizens we get 500 million meters. Similar statistics for France are 4 million tons per year and 100 million meters.
Total American corn consumption was higher, as well as total American height.
Is this because corn has an effect on height? Or is it that both statistics are likely to be proportional to the size of the country (measured here by population)?
Depending on what your exact hypothesis is, you may want to filter out size effects by measuring these statistics of the national accounts as % of GDP.
answered Mar 31 at 17:45
GiskardGiskard
13.5k32248
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Complementing @Giskard's answer, when you are using "trade as a perentage of gdp" or "FDI as a percentage of GPD", you are measuring the extent to which an economy is open to trade, or to inflows and outflows of international investment. Thus, "trade as a perentage of gdp" measures a country's trade openness, while increasing trade per se does not necessarily increase trade openness (for example a country may produce more and export more). Thus, the use of "trade" and "trade as a percentage of GDP" measures different economic phenomena.
answered Mar 31 at 20:35
emeryvilleemeryville
4,09711032
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2 Answers
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active
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2 Answers
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$begingroup$
Imagine that I am trying to determine whether eating corn has any effect on your height. I see that in the US, total corn consumption is 20 million tons per year (made up number, all others will be made up as well) and adding up the heights of the 300 million citizens we get 500 million meters. Similar statistics for France are 4 million tons per year and 100 million meters.
Total American corn consumption was higher, as well as total American height.
Is this because corn has an effect on height? Or is it that both statistics are likely to be proportional to the size of the country (measured here by population)?
Depending on what your exact hypothesis is, you may want to filter out size effects by measuring these statistics of the national accounts as % of GDP.
answered Mar 31 at 17:45
GiskardGiskard
13.5k32248
$endgroup$
add a comment |
$begingroup$
Imagine that I am trying to determine whether eating corn has any effect on your height. I see that in the US, total corn consumption is 20 million tons per year (made up number, all others will be made up as well) and adding up the heights of the 300 million citizens we get 500 million meters. Similar statistics for France are 4 million tons per year and 100 million meters.
Total American corn consumption was higher, as well as total American height.
Is this because corn has an effect on height? Or is it that both statistics are likely to be proportional to the size of the country (measured here by population)?
Depending on what your exact hypothesis is, you may want to filter out size effects by measuring these statistics of the national accounts as % of GDP.
answered Mar 31 at 17:45
GiskardGiskard
13.5k32248
$endgroup$
add a comment |
$begingroup$
Imagine that I am trying to determine whether eating corn has any effect on your height. I see that in the US, total corn consumption is 20 million tons per year (made up number, all others will be made up as well) and adding up the heights of the 300 million citizens we get 500 million meters. Similar statistics for France are 4 million tons per year and 100 million meters.
Total American corn consumption was higher, as well as total American height.
Is this because corn has an effect on height? Or is it that both statistics are likely to be proportional to the size of the country (measured here by population)?
Depending on what your exact hypothesis is, you may want to filter out size effects by measuring these statistics of the national accounts as % of GDP.
answered Mar 31 at 17:45
GiskardGiskard
13.5k32248
$endgroup$
Imagine that I am trying to determine whether eating corn has any effect on your height. I see that in the US, total corn consumption is 20 million tons per year (made up number, all others will be made up as well) and adding up the heights of the 300 million citizens we get 500 million meters. Similar statistics for France are 4 million tons per year and 100 million meters.
Total American corn consumption was higher, as well as total American height.
Is this because corn has an effect on height? Or is it that both statistics are likely to be proportional to the size of the country (measured here by population)?
Depending on what your exact hypothesis is, you may want to filter out size effects by measuring these statistics of the national accounts as % of GDP.
answered Mar 31 at 17:45
GiskardGiskard
13.5k32248
edited 14 hours ago
answered Mar 31 at 17:45
GiskardGiskard
13.5k32248
answered Mar 31 at 17:45
GiskardGiskard
13.5k32248
answered Mar 31 at 17:45
GiskardGiskard
13.5k32248
13.5k32248
add a comment |
add a comment |
$begingroup$
Complementing @Giskard's answer, when you are using "trade as a perentage of gdp" or "FDI as a percentage of GPD", you are measuring the extent to which an economy is open to trade, or to inflows and outflows of international investment. Thus, "trade as a perentage of gdp" measures a country's trade openness, while increasing trade per se does not necessarily increase trade openness (for example a country may produce more and export more). Thus, the use of "trade" and "trade as a percentage of GDP" measures different economic phenomena.
answered Mar 31 at 20:35
emeryvilleemeryville
4,09711032
$endgroup$
add a comment |
$begingroup$
Complementing @Giskard's answer, when you are using "trade as a perentage of gdp" or "FDI as a percentage of GPD", you are measuring the extent to which an economy is open to trade, or to inflows and outflows of international investment. Thus, "trade as a perentage of gdp" measures a country's trade openness, while increasing trade per se does not necessarily increase trade openness (for example a country may produce more and export more). Thus, the use of "trade" and "trade as a percentage of GDP" measures different economic phenomena.
answered Mar 31 at 20:35
emeryvilleemeryville
4,09711032
$endgroup$
add a comment |
$begingroup$
Complementing @Giskard's answer, when you are using "trade as a perentage of gdp" or "FDI as a percentage of GPD", you are measuring the extent to which an economy is open to trade, or to inflows and outflows of international investment. Thus, "trade as a perentage of gdp" measures a country's trade openness, while increasing trade per se does not necessarily increase trade openness (for example a country may produce more and export more). Thus, the use of "trade" and "trade as a percentage of GDP" measures different economic phenomena.
answered Mar 31 at 20:35
emeryvilleemeryville
4,09711032
$endgroup$
Complementing @Giskard's answer, when you are using "trade as a perentage of gdp" or "FDI as a percentage of GPD", you are measuring the extent to which an economy is open to trade, or to inflows and outflows of international investment. Thus, "trade as a perentage of gdp" measures a country's trade openness, while increasing trade per se does not necessarily increase trade openness (for example a country may produce more and export more). Thus, the use of "trade" and "trade as a percentage of GDP" measures different economic phenomena.
answered Mar 31 at 20:35
emeryvilleemeryville
4,09711032
answered Mar 31 at 20:35
emeryvilleemeryville
4,09711032
answered Mar 31 at 20:35
emeryvilleemeryville
4,09711032
answered Mar 31 at 20:35
emeryvilleemeryville
4,09711032
4,09711032
add a comment |
add a comment |
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