A Small Macroeconometric Model of the Philippine Economy

Abstract

This paper describes a small quarterly macroeconometric model of the Philippine economy. The model consists of sectors of private consumption, investment, government, trade, production, prices, money, and labor. The equilibrium-correction form is used for all the behavioral equations. The tracking performance of the model, both within-sample and out-of-sample, is evaluated and found satisfactory. Policy simulations indicate it is crucial that the Philippine government address its debt problem for it to achieve higher future growth. Oil price simulations also show the country is highly vulnerable to external shocks.

Keywords: equilibrium-correction form, macroeconometric model, oil price simulations, Philippine economy, policy simulations

JEL Classification: C53, E17, O53