A Top-Down Econometric Model for a Philippine Region

Abstract

This paper demonstrates the feasibility of constructing a supply-determined top-down econometric model for a Philippine region. The specification, estimation, historical simulation, and ex-post forecast of the model for Region 7 (Central Visayas) are presented. The simulation shows that the model tracks the sample period and ex-post values fairly well. The model could serve as a prototype for the other regions. The regional models could form a system of satellite models that could be linked to a national model which can then be used to determine regional forecasts consistent with a national forecast.