The relationship between macroeconomic indicators and economic development based on time-series model in the case of Australia Boqijonov Adxamjon Ikromjon o’g’li

Keywords: GDP per capita; OLS model; VAR Model; Time-series model; Unemployment; Inflation; FDI; Export.


INTRODUCTION
Economic growth is an indicator which shows success and failure of government policies and economic development in a country. From the expenditure approach, it should consider various variables of consumption, investment, government spending and net exports. Numerous studies have looked at the relationship between macroeconomic factors and economic growth. However, most of them have shown different results in various countries. Chirwa and Odhiambo (2016) remarked that in developing countries the macroeconomic determinants of economic growth include foreign direct investment, inflation, unemployment, export, monetary and fiscal policy, exchange rate, natural and geographic resources, regional and political factors and so forth.

Investment and economic growth have positive causality (Kholis et al., 2017). Also, Rizky et al. (2016) revealed that investment has a positive influence on economic growth. It implies that higher rates of investment, both foreign and domestic, may lead to enormous economic growth.

There are several empirical studies claiming that inflation affect economic growth negatively. These studies originated from the analyses that have micro and macroeconomic foundations. In an environment where the inflation rate is high and volatile, the disappearance of the information-transmitting feature of relative prices would decrease the economic efficiency and thus growth rate (Friedman, 1977). Another fact that indicates the negative effect of inflation on growth comes from the higher return of financial services relative to other sectors return in an inflationary environment. In an economy where the return of financial services is higher, it is possible that there can be shifts of significant amount of resources and labor power from the R&D and the industrial sectors to financial sector. This situation would limit the long-term growth potential (Frenkel and Mehrez, 1998).

The claim that the high and unstable inflation would affect growth negatively is supported by empirical studies using both time series and cross-section data (De Gregorio, Fisher, 1993; Barro, 1995; Barro 1996). Barro (1996) concluded that the unexpected inflation would affect growth negatively through decreasing the performance of households and firms.

Thus, the goal behind this research is to evaluate whether there is a positive or negative and long-term interaction between macroeconomic indicators and economic growth in Australia.

This paper is grouped into six paragraphs discussing each topic clearly. The first section comprises the abstract, which gives information the study’s background and basics. The introduction in the second part is focused on the influence and consequences of macroeconomic indicators on economic development. The third section is responsible for information and topic researching methods that have been used during study. The fifth part is results section presents for the results and outcomes. The approaches and methods are discussed in the discussion part and finally the conclusion is profiled in sixth section.

METHOD
Here is given the whole process of our study:



Data Collection



Data Conversion

Pre processing







Dickey-Fuller test

Check stationary of time-series data







Regression and correlation analysis



Data analysis using multi-factor time-series modeling technique

Indicators are turned into logarithm







Model Identification

Structural Model Identification

Diagnostics of structured models in five conditions of Gaus Markov

OLS model