Error Correction Model Analysis of Production and Consumption of Sugar in Ethiopia

Abstract

Each gram of sugar provides the body with four kilocalories. Sugar is a naturally occurring, non-toxic, sweet-tasting, water-soluble crystalline carbohydrate. Beet sugar or sugar cane is the primary source of sugar; additional sources include honey, corn syrup, fruits, and others. From Central Statistical Agency Sugar Corporation of Ethiopia annual data during the period of September 1954–2021 GC in Ethiopia, this study examined the link between the production and consumption of sugar. In this work, non-stationary time series was changed in to stationary time series by using differentiating. At 5% level of significance, all series are non-stationary at the level according to unit root tests, and stationary at first difference. The output of Johansson's cointegrated suggests that at 95% confidence level, at least one Cointegration vector exists and there is a long-run relationship between the production and consumption of sugar in the case of Ethiopia. One was discovered to be the ideal amount of delay. Different models might have conducted prior research on integration in other nations, but Ethiopia has not yet. A VECM analysis was used to empirically evaluate and confirm this result. The VECM, which implies that Ethiopia's current sugar output was considerably influenced by previous first-lag values of its own and consumption of sugar amounts, is better suited than the VAR model. Positive results are seen for sugar consumption that lags on its own. Similar to the production of sugar, the current consumption of sugar was likewise positively impacted by both its own past first-lag values and previous first-lag values. The production and consumption of sugar are expected to increase during the next five years, according to the VECM (1) trend of forecasting.