The effect of exports and

imports on GDP of
Australia.

Contents

Introduction:...................................................................................................... 3

ANALYSIS:........................................................................................................... 3

SOLUTION AND INTERPRETATION:..................................................................4

Descriptive Statistics:............................................................................................ 8
Regression Analysis............................................................................................. 10
Mathematical Equation:....................................................................................... 10

DISCUSSION:.................................................................................................... 10

REFRENCES...................................................................................................... 11

Bibliography............................................................................................................. 11

APPENDIX:........................................................................................................ 11

THE EFFECT OF EXPORTS AND

IMPORTS ON GDP OF AUSTRALIA.
Introduction:
It has been observed that the gross domestic product of any country is being highly
affected by number of parameters like inflation, exchange rate, imports , domestically
produced products exported across globe , remittances etc.
In order to the problem under consideration and area under study exhibits that we wants
to find out that whether GDP of Australia is being affected by exports or imports or not.
For this sake we have gathered the data of GDP and Exports and Imports data of
Australia from World development indicators and analyzed that whether exports and
imports bring significant change in GDP of Australia or not.
The data comprises of 31 years dated from 1973 to 2003 and with this data under study
we will analyze our stated problem.

ANALYSIS:
The analysis of problem under study that does GDP of Australia is effected from exports
or imports or not,
For this sake we took GDP as dependent variable and Exports and Imports and
independent variable.
Diagrammatic Representation:

GDP OF
Australia

Exports

Imports

Equation of the model:

GDP = + exports + imports +

 SOLUTION AND INTERPRETATION:

Visual inspection:
In visual inspection we will see the graphical representations of the data under study of
GDP of Australia and its exports and imports by viewing their trends, distribution of actual
series of data and their return (the Difference log of actual data ) series in order to
analyze fully and deeply the variation in the data.
Taking log difference the GDP, exports and imports data of Australia reduces the
modeling problem of the data which might reduces the efficiency of the analysis.

Actual series:
The actual series of GDP is showing positive trend after 1980s which shows the GDP of
Australia is increasing after 1980s
The trend of imports and exports are also showing approx positive trend which minimal
shocks in the economy which means that the imports and exports of Australia are also
increasing there is a unique change being observed in 2000 that the imports decrease
dramatically and exports increase with same significant number which mimics that in
2000 Australian economy becomes self sufficient.

Distribution of actual series:

The probability distribution of the actual series of data of GDP, exports and imports the
red line showing bimodeling problem with respect to reference normal green line which
creates issue in interpreting the data which discussed earlier that we come in problem to

decide from where we will start to analyze the area under study for that sake we will shift
to log difference which is return series of GDP and exports and imports of Australia.

Return series:
The return series which is actually the log difference of the log difference of GDP, exports
and imports of Australia are depicted below

The return series of GDP area under study showing mean reversion behavior that data
after minimal variation returns back to its mean the average value.
The return series of imports and imports are also after variation trying to converge
towards means. The series is depicted by the red line.

Distribution of Return series:

The distribution of return series of GDP, Exports and Imports of Australia (the red line) is
showing to be leptokurtic which is above normal reference line (green line) and have right
tails heavy spreading long to the right depicted in the graph.

Descriptive Statistics:
GDP
exports
Mean
Median
Maximum
Minimum
Std. Dev.
Skewness
Kurtosis

imports

355637.4
385416.0
721251.0
24763.00
236197.1
-0.181985
1.673568

187717.9
5418.000
634630.0
2584.000
224318.6
0.669572
1.888189

182986.7
6737.000
704836.0
2102.000
223924.1
0.901392
2.544148

Jarque-Bera
Probability

2.443697
0.002946

3.913018
0.001413

4.466363
0.001071

Sum
Sum Sq. Dev.

11024760
1.67E+12

5819254.
1.51E+12

5672588.
1.50E+12

Observations

31

31

31

MEAN:
The mean value of GDP, exports and Imports are given respectively: 355637.4,
187717.9, and 182986.7
Skewness:

Skewness is basically the 3rd moment about mean measures the spread of data along mean:
GDP:
The GDP is slightly negatively skewed -0.181985 as little clusters of data is more below mean.
Exports:
The Exports are slightly positively skewed 0.669572 as little clusters of data are more above mean.

Imports:
The imports are slightly positively skewed 0.901392 as little clusters of data are more above mean.

Kurtosis:
Kurtosis is basically fourth moment about mean and tells about height or peak of the data the how much frequency is
high of the data:

GDP:
The GDP data is 1.673568 clearly lepto kurtic as it is above mean proved from the diagram.

Exports:
The exports data is clearly lepto kurtic as it is above mean proved from the diagram. And its value is:
1.888189

Imports:
The imports data is clearly lepto kurtic as it is above mean proved from the diagram. And its value is:

2.544148

Regression Analysis.

Dependent Variable: SER01

Method: Least Squares
Date: 04/28/16 Time: 08:39
Sample: 1973 2003
Included observations: 31
Variable

Coefficient

Std. Error

t-Statistic

Prob.

IMPORTS
EXPORTS
C

0.490068
0.447268
181798.8

0.288137
0.288645
27783.36

1.700817
1.549545
6.543442

0.1001
0.1325
0.0000

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.768716
0.752195
117578.9
3.87E+11
-404.3303
46.53157
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

355637.4
236197.1
26.27937
26.41814
26.32461
0.230790

Under 0.15 (15%) level of significance imports and exports are significant as our prob value is
less than o.15 so we reject our null that exports and imports are insignificant so exports and
imports are significant variables which effects the GDP of a country, if there is 1 unit (can be any
number, 1 million, 1 trillion etc) change in imports of a Australia it bring 0.49 units change in
GDP of Australia. And similarly if one unit (any unit 1 million or 1 trillion or any) change in exports
of Australia it brings 0.44 percent change in the GDP of Australia.

Mathematical Equation:
GDP = 181798 + 0.4900imports + 0.44 exports.

DISCUSSION:
So the results mimics that the exports and imports of Australia bring significant change
in the GDP gross domestic product of Australia so the government of Australia should
take positive measures to increase exports and imports of the country it may lead to
more development of the country it is highly recommended that the country should
imports the plants , machines to produce finished goods in the country to become more

sustainably developed nation and exports domestically made finished goods because
exports more than imports can become an important pillar of their development.

REFRENCES.
Bibliography
Australia, GDP, exports imports data, WDI website

1993.WF1

The Eviews file for regression.

australia data.gwg

The Oxmetrics file of Australia for graphs.

APPENDIX:

Year
1973
1974
1975
1976
1977
1978
1979
1780
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003

GDP FC
exports
35773
2102
38439
2279
39930
2487
41229
2128
42401
2321
45679
2431
48204
3111
51736
3675
24763
3351
266571
4072
284667
3945
295977
3834
321751
5243
342224
6021
362110
6007
385416
6737
403948
138280
422484
171728
446005
177028
480413
205499
491325
251173
513635
294741
545093
325313
565093
373160
575999
390342
607325
443678
625233
539070
649656
384755
664048
704836
686382
560947
721251
652294