Page 19 - Azerbaijan State University of Economics

Aboubaker Khoualed, Taher Makhloufi, Ahmed Makhloufi, Elyas Luqman: The Impact
of Foreign Direct Investment (FDI) on Economic Development: The Case of Algeria

Suitability of the Model's Functional Form
The results of this test are documented in the following table:

Table 15: Test for the Suitability of the Model's Functional Form

Source: Compiled by the researcher depending on: outputs of EViews 12.

From table number (F), all three statistics have accompanying probabilities greater
than 0.05, thus we accept the null hypothesis, which states the model's functional form
is suitable.

Structural Stability Tests
Through the results of the CUSUM Test and CUSUM of Squares, we observe that the
plots for these tests lie within the 5% confidence bounds (between two straight lines),
indicating structural stability. The following figures illustrate the above .

Figure 4: CUSUM Test Results
15

10
5

0
-5

-10
-15
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

CUSUM 5% Significance
Source: Compiled by the researcher depending on: outputs of EViews 12.

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