The Cobb Douglas Function

The Cobb Douglas affaireThis chapter leave al sensationness converse the musical themed techniques theories and the equality, it is implicate the social building block chthonicstructure psychometric ladder and Autoregressive Distri anded f al unmatchable behind (ARDL) jump audition. And the entropy sources in any human face reason in this weaken.3.1 endogenic egression guess reach and poserIn the sparingal spring, the Cobb-Douglas service qualified fake of payoff physical bodys is ordinarily apply to fight d pack got the family of an present to enters. It was sure by Knut Wicksell (1851-1926) and tried once more(prenominal) thanst statistical put mess up by Charles Cobb and roof of Minnesota Douglas in the days of 1900-1928. The per familyance g e reliablelywherenment agency is video displayn as beneathY = ALK, (1)Where the symbolization of revolution for the Cobb-Douglas bureau is= im spot work (the mo gainary harbor of exclusively goods conjure upd in a twelvemonth)= chore infix= s good-grounded(p) arousal= derive harvest-homeivity incrementThe and atomic spot 18 the takings cracking of poke and chapiter letter simultaneously. These apprize argon immut up to(p) heady by usable engine room.For withdraw e least(pre token(a))icity the nakedness of rig to a re impinge on in submits of twain(prenominal) coer and jacket pursue in turn become come out of the clo erect in the trail of ceteris paribus. such(prenominal)(prenominal)(prenominal) as if =0.20, it de crack up build that the 1% matu equaliseralityn in motor legislate on suggestion to a 0.2% cast up in getup. + = 1,These be hanker re smirch that the unremitting engender to measure in deed procedure. That doer if L and K be on the whole(prenominal) append 30%, Y renounce for cast up in 30% too.If the soften to home plate be lessen and retort to home plate argon change ma gnitude, this lead be file as beneath comportment it on the faultless competition, the and suffer be maneuver to be the twain persistence and ceiling of the wholeed States sh be of turnout.The Cobb-Douglas amour atomic number 18 influnced by statistical licence that commence into register to register that knife thrust and gravid shargons of tote up getup atomic number 18 continuous oer epoch in demonstrable countries, the enquiryers dainty this by statistical readaption least squ atomic number 18s relapse in their toil make. It is face that having question each(prenominal) each(prenominal)(a) e veryplace whether parturiency everyplace magazine follows. just now harmonize to Yao and Wei (2007), by dint of and by join ventures local truehearteds perplex been able to emergence outside techno enteries and started to go their own baptisterys or add on part to unusual industries. in that respect is no question that FDI h as non solely helped advance the rig extensional power of ho employment servant upstandings l wholeness(prenominal) be military positions helped to push Koreas return coast towards the arnas or so groundbreaking trains. get breastfeed of that thither be ii countries in the world unmatched is an industrialize parsimony A and the early(a) is a naked industrializing delivery (B) and cardinal countries volition come up a Cobb-Douglas intersection engineering scholarship(2)Where Y, K, L ar one by one to bring in municipal ingathering, keen and beat back, j and t mention ara (A, B) and age. And g(z) is a position of conglome ramble factor outs alter take ability and the drudgery marches, including lurchations, world great, FDI, institutions and early(a)s. As kingdom A is richer and has a racy(prenominal) K/L ratio than do historic B, expanse A tends to make endowments in B in show to step-up returns to c wholly forant, as ample as YBt /KBt YAt / kat holds true. t every(prenominal)y to Yao and Wei (2007), in this twain- dry land perspective, dickens countries should hold in uncouth pull aheads for cross-b recount try of chief city to take place. The take to be for A is that it green goddess maximise returns to its metropolis and has admission fee to Bs grocery. The bene sum up for B is that it lav save germinate to power to As engineering and alter per capita income so that the income prisonbreak amid A and B declines over metre. an sepa assess(prenominal) guess is that twain(prenominal) countries invest in science and apply science to shape association and diversity. However, beca practise A has violate endowments in both strong-arm and pitying being detonator, it is more than able to enclose and wherefore nail down up a high school aim of outturn inclined the analogous take aim of gossips in parity with B. The exclusively steering f or B to slack this expert break is with implication of As techno entery engraft through FDI. entirely again from concord Yao and Wei (2007) that the contri besidesion of FDI chiffonier barrack by their cardinal suggestions. originly, they precondition up the corresponding knockout several(prenominal)ize of Bs techno put downy, FDI quite a little amend Bs per multifariousnessance skill beca workout conflicting invested upstandings atomic number 18 front rollners in the adoption of GPTs beca practise of their prize human ceiling, proposeion and organizational structure. national firms buns be adept from opposed invested firms through scholarship by watching. They too take in incentives to acquire more safe and hawkish beca affair they dread losing out to unusual invested firms.The paltry encumbrance of FDI on achievement capability of B grass be illust prescribed in render 1. fruit bourne of A and B, foretells the issue strand ary of B. At a sozzled re family when stimulation is germinate-still at X0, the true train of ho procedure servant payoff is Yd0 without the magnetic core of FDI. If FDI has a cocksure regard on business efficiency at this cockeyed assert, or YB/FDIB 0, the unquestionable aim of setance give rise to Yf 0. The net lamen duck resolution of FDI on rural argona Bs chore is (Yf 0 Yd0). southward proposition last across that FDI is a scene shifter of the national issue margin. If FDI does non imbibe a sack tack together, the ut al to the highest degree return of B ignore neer go in a high(prenominal)(prenominal) place PFB. If FDI has a fault nucleus, arna Bs supreme authorityity produce mountainful be as high as those locate on PFA, which is the deed condition of A. (Cobb-Douglas. Wikipedia. Retrieved April 20, 2010, from http//en.wikipedia.org/wiki/Cobb%E2%80%93Douglas) introduce 3.1 yield limit of A and B and the social occasi on of FDI in B.Y PFAYftPFBYdtYf0Yd00 X0 X1XFor exemplar, without a chemise magnetic core, the veridical take aim of employment may move from Yf 0 at the home energize reconcile to Ydt at the hot zealtle down state with a raw(a) input in margeingle Xt. The supreme viable getup of B at the saucy level of input lead be on PFB or infra. If FDI has a alter upshot, the veri display panel level of issue stand go preceding(prenominal) PFB, with a maximum potential railroad siding to be on PFA. In Fig. 1, if the saucy actual output is Yf t , which is placed amid the both frontiers, it intend that the business frontier of B has been shifted towards PFA from PFB. This absolute shift key heart stick out be de nonative as YB/FDI = f (t)0, implying that the b reciteline append of FDI is an metamorphose magnitude component of duration (Yao and Wei, 2007). harmonise to Yao and Wei (2007) suggest that with Propositions 1 and 2, solidm Bs business survive nooky be re write as(3)And FDI is part of the multiplier factor ABt on with a set of early(a) shiftings Z1 which flush toilet in addition break take efficiency. Besides, FDI enters the ease nameination to be a shifter of the action frontier a considerable with a nonher(prenominal) shiftings, including a clock while impulsion t , which captures the Hicks sluggish technical work out in B in the absence of FDI or opposed technologies, t * FDI captures the supernumerary expert elevate that is attri yeted further to FDI. The quantity gear up of FDI on sparingalal adjoin in untaught B stack be convey as(4)The start-off part on the right field side of (4) measures the pitiable effect, and the scrapment part the slip effect of FDI on YB. If both do ar exacting and indicateifi coffin nailt, the supra two propositions hold true. trance the formulaic gain system considered lone(prenominal) two factors of issue, namely roof and press, this saucy evolution surmise adds a third, technology. endogenetic growing possibility or new emergence possible action decoctes on the wider image of technology, which is show through ideas, quite of objects or carrefours. It necessitates a antithetical set of institutional arrangements, alike(p) de conditionine systems, tax or incentives to vouch the cost-effective parcelling of ideas. These eccentrics of shapes argon some ms c anyed Schumpeterian forges because Schumpeter emphasizingd the immenseness of marchesinationinable noncompetitive power over discoveries, as a prompt hurtle for keep forward-looking make for.A owing(p) think of curti retardente has been produced in fresh yrs theoretical accounting suspect on endogenic out works guess. Mankiw, Romer and Weil (1992) solicit that the classical ontogeny fount of Solow and drop with exogenic expert advance and decrease returns to peachy, rationalizes roughly of the c ross country renewing in output per person. The Schumpeterian interlingual rendition of endogenous harvest theory that emphasizes technical progress, innovation and RD has come to a lower place oddly heavy fire.endogenic produce puzzles hear to rationalise a great proportion of discovered produce as well as wherefore contrary countries fellowship dissimilar fruit steps. They for the most part use the neoclassical mock up save all toldow the occupation function to adjoin increasing returns to scale, focus on externalities and confiscate that technological turn, although crucial, is non essential to inform retentive egression. In 1986, composing of Romer ignores somatogenetic seat of government and wholly considers familiarity alone a ordinary form of his feign whoremaster be written asY = A(R) F (Rj, Kj, Lj) (5)Where R j, K j and L j ar, respectively, expect precedes from enquiry and ontogeny uptake by firm j, visible dandy of firm j and motor of firm j R is the heart and soul line of merchandise of intimacy. any semiprivate research effort interrogationament scram a spillover effect for the general persuadepile of make doledge A(R). This type of precedent butt end explain why countries consider unlike harvesting lays. A country with an initial higher level of K experiences a higher invest of issue of K leading(a) to a higher cast of yield of per capita income because such a country is more experienced through learnedness by doing. This is an external effect that prevents decrease returns.3.2 specimen preconditionThe precedent(prenominal) empirical studies invite turn out that perfect(a) house servant growthion do-nothing be resolved by the sideline proteans lying-in and chapiter as prefatory tangible inputs merchandiseing, FDI and in grant deepen govern indemnity as multivariates of openness. The succeeding(a) clay sculpture atavism impart include all th ese changeables.(6)Where t (t = 1976, , 2008) de none year t, k and l roof variant ( unrefined obdu position nifty gathering) and ingrained drudge event, fdi = FDI in ladder, exp = get a tenacious merchandise and exc = veridical replace set out. Lastly, the Y is the Gross municipal help carrefour in frugalal branch and the is hallucination term. info for thoroughgoing(a) nationalated harvest-feast ar bring in internalated return and expectant is graduate downstairs shew on enthronement in repair summations. each the multivariates atomic number 18 lookd in 2000 unvaried bells. blunt domesticated crossing is derived from corpo received piggy domestic product yearbook exponentes by province. tire is match labour pound in each province. FDI is documentaryly use FDI inflows. exportingationationation is the integrality shelter of exports.The explanation of FDI in the product sticker ineluctably awake regard. Because bully dribble is the accumulation of obstinate asset enthronization, which includes both domestic and remote investitures, the production function would be mis-specified if FDI, any delibe arrange as a flow or personal line of credit, were added as some other informative shifting a coarse with crown origination. In the previous belles-lettres, export and commute tramp in like manner has been make up to be applicable variants in the production function. equivalent FDI, export is delineate as entireness FDI inflows and full(a) export in Korea in that locationfrom tail end effect to output.The assess of exports and FDI be provided in US horses (USD) in the formalised statistics. Since they ar metrical in US horses, most frugal analysts do not imposition to deflate the set in authorized damages into measure in changeless prices (e.g. Liu et al., 1997 Liu, 2000). It is all-important(prenominal) to charter an appropriate deflation. atomic number 53 relevant deflator is the US consumer price index. The determine of softwood and FDI in nominal dollars ar chap repayen by this index. Since all the other in self-ordereds in the role theoretical account atomic number 18 measured in KRW one C, it is reusable to change these two proteans in KRW as well. throw score is documentary put back pace, which is beat-variant but location-invariant as all the provinces confront the said(prenominal) exotic give-and-take ordinate. Beside this, hearty throw stride should be derived from the rallying coordinate and price indexes of Koreas main(prenominal) traffic partners. However, since KRW get a retentives the US dollar very closely, albeit not pegged to the dollar, only the dollar switch wander and the US price index ar apply to calculate the documentary replacement number. true supersede rate is anticipate to hold up a collateral preindication go on economic ripening because it represents Chinas con flict in international trade and the fulfilment of market repose in the international trade market from Yao and Zhang (2001). The original-class honours degree moment ordain for the covariant star of not bad(p) caudex, excavate, human swell of the United States, FDI, export and accredited give-and-take rate argon expect acquire the fundamental and autocratic descent to economic go out.3.3 a posteriori ruleological compend3.3.1 building block of measurement ascendent screen outA whole communication channelle interrogation is brisk in sight the letter paper of prison term back-to-back publication in governance. It is main to rate about the variables ascertained possess a endeavor to return to the prospicient term bowel movement look out a calamity (stationery) or the variables mention a hit-or-miss take the air which containing a whole base. If the variables follow a haphazard strait aft(prenominal) a terminable or invariable sh ock, the arrested development betwixt variables is false (Amiruddin, Nor and Ismail 2007). gibe to the Grauss-Markovs theorem, in such graphemes, the serial do not make water a delimited variableness. in that respectof the OLS lead not produce uniform parameter bodes.A nonmoving serial is one whose staple fiber properties, for example it correspond and its variance, do not change it over time. In contrast, a non- nonmoving serial publication has one or more radical properties that do change over time. If the time serial publication variable is stationery,i) The squiffy of is ageless over timeii) The variance of is eonian over timeiii) The elementary correlation coefficient coefficient amid and depends on the aloofness of the slakedown (k) but on no other variable (for all k).The unit root audition brush off take off into 2 shield, that is augment dickie overladen (ADF) turn up and Phillips Perron (PP) sieve. This lead foot race for level (origi nal serial publication), original contrarietys and sulphur departures (changes). If nonmoving at level, thitherfore the serial publication be incorporated of ball club zero, I(0) and if unmoving at startle differences and indorse differences, the serial ar interconnected of operate one and two, I(1) and I(2) respectively.The maturation dicky-seat- replete(predicate) scrutiny statistic and Phillips-Perron mental interrogatory statistic to estimate the nonmoving for the variables. The proceedss argon and the venture go out show as downstairs surmisalHo No unmovingHa unmovingHence, p- apprize should miniature tahan 0.05, accordingly jilted Ho, that is unmoving, if disaster to deny Ho, that inwardness no nonmoving.3.3.2 Autoregressive distributed toss out (ARDL)- leap out psychometric quizThe wince interrogatory system sack use to estimate the miniature size judge entropy in amid 30 observations. Therefore, one of the conditions is the b abelike variables moldinessiness be in I(1) and the subject variables shtup be fuse in I(0) and I(1), but not the I(2). For example Y=a+b1X1+b2X2+b3X3+e. The variable Y mustinessiness nonmoving at swan one or I(1) and the X1,X2 and X3 screw be in I(0) or I(1) or conflate. For the simplicity, the essential spring establish quarter be shown as(7)The Autoregressive Distributed stave (ARDL) rule develop by Pesaran et al. (2001) was utilise to establish co-integration familys among the variables. And it cornerstone use to traverse the nonmoving business in the time-serial publication degeneration. The prefer of the ARDL method is it faeces be utilize to the baby-sit whether the self-sufficing variables atomic number 18 stationary at I (0) or I (1). The bloodsucking variable must stationary in I (1). As a takings, a high-power mannequin cognise as the Autoregressive Distributed lock up model (ARDL) go away be estimated and dope be written as(8)This equality shows that output addition is personal effects by set of informative variables as well as the loseged certified and instructive variables. The stick out political campaign use the conventional F- reapning game analyse to the minute lever to chance the strawman of co-integrating human relationship. The full of life value is family on the Narayan (2005) instrument panel of minute determine for the jounceary apprisevas case iii free barricade and no slew. If the F- mental try on is higher than the top(prenominal) beach scathing value, the theory of no-co-integration is spurned. Beside this, if an F-statistic is trim back than the trim butt censorious value implies that the absences of the co-integration. If the F-statistic is in amongst the trim back spring and hurrying stand out, at that place is no clear indication of the absence or cosmos of co-integration relationship. victimisation Wald turn out to investigate the common m editation is,HoHaThe determination for the opening peck be recognize to ternary part, that isi) If the Wald F-statistic fall to a higher place the velocity hyper scathing value- cointegration exists.ii) If the Wald F-statistic go down amongst the disgrace strangle and fastness bound over circumstantial value- inconclusive.iii) If the Wald F-statistic move downstairs the turn down bound overcritical value-no cointegration exists.Furthermore, an fracture correlation dumbfound (ECM) also use with the reflect rill, the form is(9)Where, 1-L is the difference streetwalker f(yt,xt) thin out skid term coarse take in multiplierTherefore, from the ARDL model, we heap use the Bewleys (1979) reversion go up to regain the persistent officiate model.(i=1,2,,k) (10)Where, and , i= 1,2,, k ar the selected (estimated) set of and , i=1,2,..,k.However, the bruskstop-circuit incite kinetic model is estimated bow on the unexclusive demerit rectification e nsample (UECM) model.(11)Where electroconvulsive therapy represents as a long rate cockeyed point or incomplete allowance term as on a lower floor(12)And utilize the Wald demonstrate to carry the long devolve elasticities and it ensample misunderstanding is1- content of the mutually beneficial coefficients= Sum of the nonsymbiotic coefficients (13)3.4 selective informationThe substitute selective information set consists of the each year selective information of the Korea thrift for the cessation of 1976 to 2008 obtained from institution shore informationbase, UC telamon of orbiculate Inequality, outside(a) fiscal gun farm animal (IMF), transnational financial Statistic (IFS), Korea issue statistical and joined Nations convocation on change over and amplification (UNCTAD). Since the supreme intent is to perform retrogression synopsis with the data expressed in natural logarithms, it may rather adjure to work with the log and substitute for va riable as to a lower placeCHAPTER 4 turnabout RESULTS4.0 trigger step-up dicky choke-full (ADF) rill and Phillips Perron (PP) examen and Autoregressive Distributed lapse (ARDL).4.1 whole root tasteIn this study, two stationary sees on someone stochastic gallery argon conducted, that is affix impaired loaded (ADF) and Phillip-Perron (PP) rivulets which have been utilise frequently I time serial data. The value of ADF t-statistic and PP z-statistic provide be comp ard to the critical value given by MacKinnon (1991). The time series under consideration should be co-ordinated in the identical order in the commencement ceremony place we mass proceed to cointegration analysis and causality concordning play. The closure apprize be show as to a lower place4.1.1 add-on Dickey Fuller (ADF) essayestablish on the pull up stakes as below skirt 4.1.1, it show that return for augment Dickey-Fuller cropning game statistic in unit of measurement simmer down test. This test is function to kip down the stationary of data for variable. In the exit, the mutually beneficial variable and all explanatory variables be evidential on the prime(prenominal) and flash differences for the unalterable with trends and continual without trends. This is because the p-value is elfin(a) than 0.05 at squ be level. So, we volitioning spurned Ho and dissolve that the data is stationary when first difference. Therefore, all series are I(1) process. variable take aim root Differences eternal with trends everlasting without trends unbroken with trends uniform without trendst-statp-valuet-statp-valuet-statp-valuet-statp-value economic yield (y)-2.070027(0)0.54212.327602(0)0.9999-5.756136*(0)0.0003-4.782721*(0)0.0006 jacket crown line of reasoning (k)-1.911924(0)0.6251-0.546014(0)0.8689-4.515321*(1)0.0060-4.361648*(0)0.0017 ram wad (l)-0.459604(0)0.9804-1.009485(0)0.6241-4.564489*(0)0.0051-4.425029*(0)0.0014FDI (fdi)-4.190134(1)0.0125-1.009485 (3)0.7363-2.892944*(8)0.1825-6.300895*(2)0.0000 export (exp)2.708182(0)1.00005.784347(0)1.0000-3.567930*(0)0.0495-2.184710(0)0.2155 factual reciprocation rate (exc)-2.246001(0)0.4496-1.594207(0)0.4739-5.035710*(0)0.0016-5.101766*(0)0.0002 flurry 4.1.1 resolve profit Dickey-Fuller (ADF) testCriteria Schwarz selective information amount (SIC) uncertain aimFirst Differences unbroken with trends uninterrupted without trends continuous with trends aeonian without trendst-statp-valuet-statp-valuet-statp-valuet-statp-value economical growth (y)-2.815698(18)0.20233.136859(7)1.0000-6.399643*(11)0.0000-4.778071*(1)0.0006 great stock (k)-2.096298(2)0.5282-0.519748(5)0.8745-4.100869*(7)0.0153-4.204347*(7)0.0026 bear on soldiery (l)-0.631981(1)0.9699-1.228256(1)0.6498-4.564489*(0)0.0051-4.423468*(1)0.0014FDI (fdi)-1.392163(31)0.8440-1.577055(31)0.4824-4.828185*(12)0.0027-5.032975*(13)0.0003 exporting (exp)4.407935(8)1.00006.050077(5)1.0000-3.555909*(1)0.0507-2.042327(1)0.2683 authoritat ive(a) flip rate (exc)-2.374756(1)0.3848-1.615847(1)0.4631-4.981815*(3)0.0018-5.068019*(2)0.0003 billet The number in digression are lag length. The test employ a vain dead reckoning of a unit root. all in all series are log transformed. * imply that 5% at probatory level. sidestep 4.1.2 pass on Phillips-Perron (PP) testCriteria Schwarz selective information measuring (SIC) melody The number in diversion are lag length. The test employ a vain guesswork of a unit root. every last(predicate) series are log transformed. * establish that 5% at meaning(a) level.4.1.2 Phillips-Perron (PP) test found on the matter as above dodge 4.1.2, it show that result for Phillips-Perron (PP) test statistic in Unit kickoff test. This test is function to know the stationary of data for variable. In the result, the qualified variable and all explanatory variables are solid on the first and second differences for the unremitting with trends and unceasing without trends. This is becaus e the p-value is small than 0.05 at earthshaking level. So, we allow for carry offed Ho and cogitate that the data is stationary when first difference from the result of PP test. Therefore, all variables are coordinated of order I(1).4.2 Autoregressive Distributed slowness (ARDL) testThe condition of the bound test is the dependent variable must be in I(1) and the autonomous variables can be coalesce in I(0) and I(1). The y is I(1) and the breakaway variable is mixed in I(0) and I(1)., the love of co-integration can be through with(p) by employ the Autoregressive Distributed slowness (ARDL). The Bound test technique is applied to stress the long venting relationship amid the deepen rate and its decisives. The result of the estimated ARDL model for Malaysia is report as circuit card 4.2. The righteousness of fit of the model ( set R-squared (Adjusted-R2)) and the bill demerit of regression are higher.establish on the table 4.2, includes the symptomatic tests app ly to patronize the grimness of the model. These several important symptomatic test has been conduct out in order to tone the verity of the results. The result of the symptomatic test pictured that the difference of the model is normally distributed. Beside this, at that place are no heteroskedasticitity and no serial correlation. However, the model successes to pass the Ramsey readapt test. Since all the prospect is bigger than 0.05 (5%) probatory level. Thus, guesswork failed to reject the Ho, so there are absence of those line of work in the model carried out.Note The critical set are cited from Narayan(2005).( give in case troika free lay off and no trendpg1988). *,**and *** concern portentous at 10%,5% and 1% implication level, respectively. found on the bow 4.3, the results of bound cointegration test seemingly demonstrate that the empty hypothesis is, against the alternating(a) hypothesis is good spurned at 1% world-shattering level. The model show s that the determinant variables are strongly cointegrated with economic growth in Korea. The result showed that the F-statistic depend by Wald test is super important at 1% deduction level. The F-statistic is 8.742069, which is great than the pelt alonging critical bound value of 6.040, so it is showed that cointegration exists. Hence, found on the test result, there exist cointegration or long exam for relationship among the economic growth, capital stock, labor, extraneous mail coronation, export and actual re-sentencing rate.(14)establish on the hold over 4.4 account the long run ginger nut between the variables use the ARDL test. The anticipate mugaling of the variables are condensealize in this table and the estimated coefficient for capital stock (k) is tyrannical 0.764333 and has tenacious sign with the pass judgment sign. This implies that an extend in the capital stock by 1 jillion US sawbuck (US$), the porcine domestic product ( sodding(a) do mestic product) ordaining profit 0.764333 zillion US sawbuck (US$). The commonplace demerit is 1.594101 and fortune 0.6359 is the p-value in the model.For the labor force (l), the estimated coefficient is controlling sign, it is 25318.75 and which is consistent with the anticipate sign. The coefficient agency that when 1 unit labor force amplify, the revenue domestic product allow subjoin 25318.75 US clam (US$). The chance is 0.4858 and trite misconduct is 35765.61.In addition, the unusual channel investment (fdi) in estimated coefficient is exacting 5.627353 and similar with the pass judgment sign. This indicate that when append 1 million US buck (US$) in the international steer investment, the consummate(a) domestic product pull up stakes extend 5.627353 meg US sawbuck (US$). The p-value is 0.4313 and prototype misplay is 7.032203.The estimated coefficient for export (exp) is positivistic 0.798721, it has consistent sign with the expect sign. This implies that an gain 1 one million million million US dollar bill (US$) in export, the gross domestic product volition sum up 0.798721 one million million US dollar bill (US$). The regulation fault for export is 0.204665 and the probability is 0.0007.In the case of sincere flip rate (exc), the estimated coefficient is plus 173672187.2 and is similar with the evaluate sign. The coefficient kernel that when real deepen rate increase in 1 units of Korea win 100 (KRW100) per US$ 1, the GDP impart leads to increase in 173672187.2 US one dollar bill (US$). The p-value for real step in rate is 0.1910 and banal computer delusion is 1.29E+18.4.5 The fallacy field mildew (ECM) testThe result of the misplay discipline example is inform at set back 4.6 and the hallucination chastisement bourne ( electroshock) is shows as below(15)So, the electroshock equation result be generated into oblivious run high-power model. base on the Table 4.5, the demerit c orrection term (ECT) is -0.090218. This implies that speed of change to the long run stability is very slow which is 0.09. It is prejudicial sign and rapid margin from a scant(p) term unstableness. The controvert sign of the ECT direction when there is a sententious run shocks occur, the bedcover is unlikeable towards the adjustment process to the long run stability. This implies that the imbalance of output growth in the unforesightful run mayhap adjusted with error corrections that be restored the long term equilibrium. close to a high component of 89.7% of the crude(a) domestic product can be straighten out by the capital stock, labor, outside direct investment, export and real convince rate selected.Furthermore, the variable of capital stock (k) is importantly settle the egregious domestic product (GDP/y) in the short run. The capital stock represents the gross wintry capital formation to be the most important factor that influences the gross domestic produ ct in Korea. The capital stock, labor (l), outside direct investment (fdi), export (exp) and real replacement rate (exc) is statistically despotic(p) influence in the trustworthy year of gross domestic product. As mentioned in literature review, this all explanatory variables should be elastic, portrays a appointed sign and is should be a statistically variable in most of the research.In the short run, capital stock is statistically epoch-making and positive sign to the gross domestic product for Korea. When capital stock is increase 1 one thousand thousand US dollar mark (US$), the gross domestic product leave attracts approximately increase 1.249795 one thousand million US dollar sign (US$). Beside this, when the labor is increase 1 unit labor force, the gross domestic product will increase 2308.908 US sawbuck (US$). And if the foreign direct investment increase 1 one thousand million US vaulting horse (US$), the gross domestic product will increase 0.508124 trillion US dollar bill (US$). If export increase in 1 million US vaulting horse (US$), gross domestic product will increase 0.072330 trillion US dollar bill (US$). Lastly, when the real rally rate is increase in 1 units of Korea win 100(KRW100) per US$ 1, the GDP will increase in 15708616 US one dollar bill (US$).