Modeling of Economic Growth Rate in West Nusa Tenggara Province with Longitudinal Kernel Nonparametric Regression

Abstract

Economic growth can indicate the success of economic development in people's lives, so it is essential to study the relationship between economic growth and factors that affect economic growth. Regression analysis is one of the most widely used statistical data analysis methods to determine the relationship pattern between the independent and dependent variables. Three methods can be used to estimate the regression curve, one of which is nonparametric regression. Economic growth data is one form of longitudinal data, with observations of independent subjects, with each subject being observed repeatedly over different periods. Kernel nonparametric regression model applications can be used for longitudinal data. This research aims to estimate the curve and get the best regression model. In this research, the smoothing technique chosen to estimate the nonparametric regression model for longitudinal data is the kernel triangle estimator, which can be obtained by minimizing the square of error using Weighted Least Squares (WLS) and selecting the optimum bandwidth using the Generalized Cross Validation (GCV) method. This study uses the economic growth rate in West Nusa Tenggara as the dependent variable and the human development index, population density, general allocation funds, local revenue, and labor force participation as independent variables. The result showed that the model is less accurate because of the low value of the coefficient for determination and the high value of the mean absolute percentage error (MAPE). This can be caused by the selection of bandwidth intervals that are too small.