International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue VI, June 2022 | ISSN 2454–6186

A Simplified Vector Autoregressive Model Application on The Philippine Economic Performance During the Period 1965-2010

Eric J. Nasution

Abstract: Let this study be known to many that the economic performance of the Marcos administration during the period 1965-1986, was significantly much better than that of the post-Marcos administration. It used a co-integration analysis and a comparison between the Marcos administration and other administrations’ economic performance. The time series variables are comprised of the Philippine GDP (ppp) or GDP, GDP yearly growth or GR, level of inflation or INF, capital formation as a percentage of GDP or CAP, and industry’s share in the economy or IND. It clearly summarized a much better economic performance under the Marcos administration, which many had regarded as a culprit. In the first research question, at an optimal lag of one (1), the ADF test shows that all unit root variables are stationary at first differences on the 5% level of significance, which therefore characterizes the time series data under Marcos administration as integrated at the first difference or I (1). So, all economic indicators seemed to be good predictors. The hypothesized equilibrium model for regressing the GDP (ppp) resulted as: GDP (1.000)=GR(2634.1)+INF(23137.7)+CAP(1241.1)+IND(-5884.4), shows degree of stability. The Granger-causality test statistics were applied to answer research question two on causality. It pointed to the need of continued industrialization in the country as CAP and IND Granger-caused Philippine GDP (ppp). While research question three simply compared the Marcos and other administrations’ economic performance, which mostly indicated better economic indicators. The study concluded that the Marcos administration’s economic performance were relatively better than those subsequent administrations. Let us ask the Lord for an intellectual maturity to comprehend what President Ferdinand E. Marcos had done for the Philippines. God bless all of us.
Keywords: Capital formation or CAP, GDP (in ppp or purchasing power parity) and its growth (GR), industry weight in the Philippine economy or IND, inflation rate or INF, order of integration or I (d), and major industrial projects or MIPs.

I.BACKGROUND OF THE STUDY

The background of the study observed the historical setting in the form of time series of the Philippine economy during the period 1965-2010, comparing the administration of President Ferdinand E. Marcos (Marcos) with those of the other administrations, in response of the negative comments many have generally made on him. The other administrations refer to those of President Corazon C. Aquino (1986-1992), President Fidel V. Ramos (1992-1998), President Joseph E. Estrada (1998-2001), and President Gloria Macapagal (2001-2010). The determinants of the country’s gross output or the GDP (ppp), GDP growth rate or GR, inflation level within the

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