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le are related. In this research, Unemployment is the dependent variable. The independent variables which are factors that affect unemployment are consumption, investment, government spending, and trade.

Figure 2: Factors that affect Unemployment in Malaysia

Independent Variables

Consumption

Investment

Government Spending

Trade

Economic Growth

Dependent Variable

Unemployment

3.2 Sources of Data

In this research, secondary data will be use. Secondary data is data which is data that already exist. I will get my data from DataStream from the faculty lab.

3.3 Research Method

Research Method is the methods that I going to run test in order to develop this research model.

3.3.1 Unit Root Test

Unit root tests can be used to determine if trending data should be first differenced or regressed on deterministic functions of time to render the data stationary. A unit root means that the observed time series is not stationary. When nonstationary time series are used in a regression model one may obtain apparently significant relationships from unrelated variables.

3.3.2 Detrending Techniques

When there is nonstationary data, the Ordinary Lease Square (OLS) Linear Regression test will indicate the wrong result. In order to remove the linear trend, we need to detrend the model from nonstationary to stationary. Hodrick and Prescott Filter is a detrending method that I am going to use it in this research.

3.3.3 Ordinary Lease Square (OLS) Linear Regression Model

Regression analysis is to study the relationship between dependent variable and independent variables. Ordinary Lease Square model is to minimize Residual Sum of Squares and follow the assumptions of the classical linear regression model. OLS estimators are Best Linear Unbiased Estimators.

Chapter 4 Results and Discussions

Table 4.1.1 Unit Root Test at Logarithmic levels and First differences

notes: ** denotes significance at the 5% level, *** denotes significance at 1% significance level and the rejection of the null hypothesis of non-stationary.

The unit root results shows that all the variables are fail to reject at the logarithmic level. This result implies that all the variables are not stationary at the logarithmic level. However, the results at the first difference show that all the variables are rejected at 1% and 5% level respectively except the government consumption variable. This result implies that all the variables have become stationary variables and the government consumption variable still remain as not stationary variables at the first difference level.

4.2 Detrending Techniques - Hodrick-Prescott Filter

Hodrick-Prescott Filter is used as detrending method in this research in order to remove the trend component from a time series trend. Hence, the application of linear detrending model to transform the data into stationary.

Figure 4.2.1: private consumption

Figure 4.2.2: Investment

Figure 4.2.3: Government Expenditures

Result shows that the data of private consumption, investment and government expenditures has upward trend. By using the Hodrick-Pres本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。