Hi everyone,
I am an undergraduate economics student working on this model. I am posting here not just to get answers, but genuinely to learn and test my own understanding. Any feedback, criticism, or suggestions are welcome.
The primary objective of this model is to isolate and quantify the effect of meteorological drought on annual barley production. ΔCultivatedArea is included strictly as a control variable.
The empirical model is specified as follows:
Where:
n=26(due to differencing of cultivatedarea
t= year PRODUCTION: Annual barley production (tonnes)
SPEI_7: 7-month SPEI index for August
ΔCultivatedArea: First difference of barley cultivated area (hectares)
What are the steps I should follow, in order, to properly estimate and validate this model?
So far I have completed the following steps:
I am an undergraduate economics student working on this model. I am posting here not just to get answers, but genuinely to learn and test my own understanding. Any feedback, criticism, or suggestions are welcome.
The primary objective of this model is to isolate and quantify the effect of meteorological drought on annual barley production. ΔCultivatedArea is included strictly as a control variable.
The empirical model is specified as follows:
Where:
n=26(due to differencing of cultivatedarea
t= year PRODUCTION: Annual barley production (tonnes)
SPEI_7: 7-month SPEI index for August
ΔCultivatedArea: First difference of barley cultivated area (hectares)
What are the steps I should follow, in order, to properly estimate and validate this model?
So far I have completed the following steps:
- ADF Unit Root Tests
- Pearson Correlation Matrix (Multicollinearity Check)
- OLS Estimation
- Breusch-Godfrey Test (Autocorrelation)
- Breusch-Pagan-Godfrey Test (Heteroskedasticity)
- Jarque-Bera and Shapiro-Wilk Tests (Normality of Residuals)
- Ramsey RESET Test (Functional Form)
