Modeling and Forecasting GDP per Capita in Rwanda
DRJ - Journal of Economics & Finance, 4 (2), pp. 21 - 29.
9 Pages Posted: 8 Apr 2019
Date Written: March 6, 2019
Using annual time series data on GDP per capita for Rwanda from 1960 to 2017, the study analyzes GDP per capita using the Box – Jenkins ARIMA technique. The ADF tests showed that Rwandan GDP per capita data is I (1). Based on the AIC and the Theil’s U, the study presents the ARIMA (3, 1, 1) model. The diagnostic tests further showed that the presented parsimonious model is quite stable and acceptable. The results of the study indicate that living standards in Rwanda will continue to slowly improve over the next decade. Vision 2020’s “middle income status” goal is likely not to be achieved, although this does not obliterate Rwanda’s success story of significantly reducing extreme poverty. Indeed, Rwanda’s economy is growing and other African countries must learn from Rwanda’s experiences. The study offers policy prescriptions in an effort to help policy makers for Rwanda on how to promote and maintain the much needed sustainable growth in Rwanda.
Keywords: ARIMA, Box – Jenkins, Economic Growth, GDP per capita, Forecasting, Poverty, Rwanda
JEL Classification: C53, E37, O47
Suggested Citation: Suggested Citation