90
E. N. Udemba
Fig. 3 CUSUM 2 residual
graphical plot before
structural break test with
Chow
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
94
96
98
00
02
04
06
08
10
12
14
16
CUSUM of Squares
5% Significance
Fig. 4 CUSUM residual
graphical plot after the
structural break test with
Chow
-8
-6
-4
-2
0
2
4
6
8
2011
2012
2013
2014
2015
2016
CUSUM
5% Significance
Fig. 5 CUSUM 2 residual
graphical plot after the
structural break test with
Chow
-0.4
0.0
0.4
0.8
1.2
1.6
2011
2012
2013
2014
2015
2016
CUSUM of Squares
5% Significance
4.5 Granger Causality Analysis (VECM)
Granger causality is applied in this study for a robust check to the cointegration
estimates and for confirmation of the forecasting power of the variables. The cointegration analysis confirms the level of relationship that exists between the dependent
and independent variables without much insight as to which variable is inducing or