gdp-gcf-inflation

April 16, 2025

[3]: !pip install statsmodels

import pandas as pd
import numpy as np
import statsmodels.api as sm
import matplotlib.pyplot as plt
import seaborn as sns

# Create the dataframe from the provided data

data = {
'Year': ['2014-15', '2015-16', '2016-17', '2017-18', '2018-19', '2019-20',␣
↪'2020-21', '2021-22', '2022-23'],

'GDP': [10527674, 11369493, 12308193, 13144582, 13992914, 14534641,␣

↪13694869, 15021846, 16071429],

'GCF': [4179779, 4422659, 4918077, 5791573, 6396053, 6106406, 5597593,␣

↪7648091, 8677533],

'Inflation': [-3.35, -1.76, 0.04, -1.62, 0.61, -0.21, 2.89, -1.49, 1.57]
}

df = pd.DataFrame(data)

# Convert GCF and GDP to millions for better coefficient interpretation

df['GDP_millions'] = df['GDP'] / 1000000
df['GCF_millions'] = df['GCF'] / 1000000

# Correlation matrix
print("Correlation Matrix:")
corr_matrix = df[['GDP_millions', 'GCF_millions', 'Inflation']].corr()
print(corr_matrix)

# Visualize the correlation matrix

plt.figure(figsize=(8, 6))
sns.heatmap(corr_matrix, annot=True, cmap='coolwarm', center=0)
plt.title('Correlation Matrix')
plt.show()

# Regression 1: GDP as dependent variable, GCF as independent variable

print("\nRegression 1: GDP ~ GCF")

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X_gdp = sm.add_constant(df['GCF_millions']) # Adds a constant term to the␣
↪predictor

y_gdp = df['GDP_millions']

model_gdp = sm.OLS(y_gdp, X_gdp)

results_gdp = model_gdp.fit()
print(results_gdp.summary())

# Regression 2: Inflation as dependent variable, GCF as independent variable

print("\nRegression 2: Inflation ~ GCF")
X_inf = sm.add_constant(df['GCF_millions'])
y_inf = df['Inflation']

model_inf = sm.OLS(y_inf, X_inf)

results_inf = model_inf.fit()
print(results_inf.summary())

# Plotting the relationships

fig, (ax1, ax2) = plt.subplots(1, 2, figsize=(14, 6))

# GDP vs GCF
ax1.scatter(df['GCF_millions'], df['GDP_millions'])
ax1.plot(df['GCF_millions'], results_gdp.fittedvalues, color='red')
ax1.set_xlabel('Gross Capital Formation (millions)')
ax1.set_ylabel('GDP (millions)')
ax1.set_title('GDP vs GCF')

# Inflation vs GCF
ax2.scatter(df['GCF_millions'], df['Inflation'])
ax2.plot(df['GCF_millions'], results_inf.fittedvalues, color='red')
ax2.set_xlabel('Gross Capital Formation (millions)')
ax2.set_ylabel('Inflation (%)')
ax2.set_title('Inflation vs GCF')

plt.tight_layout()
plt.show()

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Installing collected packages: patsy, statsmodels
Successfully installed patsy-1.0.1 statsmodels-0.14.4
Correlation Matrix:
GDP_millions GCF_millions Inflation
GDP_millions 1.000000 0.948508 0.603680
GCF_millions 0.948508 1.000000 0.440572
Inflation 0.603680 0.440572 1.000000

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Regression 1: GDP ~ GCF
OLS Regression Results
==============================================================================
Dep. Variable: GDP_millions R-squared: 0.900
Model: OLS Adj. R-squared: 0.885
Method: Least Squares F-statistic: 62.77
Date: Wed, 16 Apr 2025 Prob (F-statistic): 9.70e-05
Time: 18:05:22 Log-Likelihood: -7.0432
No. Observations: 9 AIC: 18.09
Df Residuals: 7 BIC: 18.48
Df Model: 1
Covariance Type: nonrobust
================================================================================
coef std err t P>|t| [0.025 0.975]
--------------------------------------------------------------------------------
const 6.5673 0.886 7.410 0.000 4.472 8.663
GCF_millions 1.1456 0.145 7.923 0.000 0.804 1.487

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==============================================================================
Omnibus: 0.604 Durbin-Watson: 0.951
Prob(Omnibus): 0.740 Jarque-Bera (JB): 0.440
Skew: 0.441 Prob(JB): 0.803
Kurtosis: 2.372 Cond. No. 27.8
==============================================================================

Notes:
[1] Standard Errors assume that the covariance matrix of the errors is correctly
specified.

Regression 2: Inflation ~ GCF

OLS Regression Results
==============================================================================
Dep. Variable: Inflation R-squared: 0.194
Model: OLS Adj. R-squared: 0.079
Method: Least Squares F-statistic: 1.686
Date: Wed, 16 Apr 2025 Prob (F-statistic): 0.235
Time: 18:05:22 Log-Likelihood: -17.092
No. Observations: 9 AIC: 38.18
Df Residuals: 7 BIC: 38.58
Df Model: 1
Covariance Type: nonrobust
================================================================================
coef std err t P>|t| [0.025 0.975]
--------------------------------------------------------------------------------
const -3.7926 2.707 -1.401 0.204 -10.193 2.608
GCF_millions 0.5734 0.442 1.298 0.235 -0.471 1.618
==============================================================================
Omnibus: 2.102 Durbin-Watson: 2.616
Prob(Omnibus): 0.350 Jarque-Bera (JB): 0.662
Skew: 0.664 Prob(JB): 0.718
Kurtosis: 2.964 Cond. No. 27.8
==============================================================================

Notes:
[1] Standard Errors assume that the covariance matrix of the errors is correctly
specified.
/usr/local/lib/python3.11/dist-packages/scipy/stats/_axis_nan_policy.py:418:
UserWarning: `kurtosistest` p-value may be inaccurate with fewer than 20
observations; only n=9 observations were given.
return hypotest_fun_in(*args, **kwds)
/usr/local/lib/python3.11/dist-packages/scipy/stats/_axis_nan_policy.py:418:
UserWarning: `kurtosistest` p-value may be inaccurate with fewer than 20
observations; only n=9 observations were given.
return hypotest_fun_in(*args, **kwds)

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