Dear Abdur,

in your model specification, GDP should be the dependent (explained) and trade liberalization independent (explanatory) variable.

Martin

If you want to look at the impact of trade on GDP you need to have GDP as the dependent variable, and trade an independent variable.

(2)

you can read NO 1 this continue of it

models of time series that transition over a set finite states, states are unobserved and the process can switch among state, and the transition follow a Markov process.

(3)

Markov- switching dynamic regression:

allow states to switch according to Markov process ,also for quick adjustment,after change of state,often applied to high frequency data(monthly,weekly,atc)

Markov switching AR model:

this can be allow states to switch according to Markov process ,also gradual adjustment after change of state,it can be used with lower frequency data (quarterly, yearly ,etc)either notes you can use with the auto regressive Markove models.

i hope that i well give some notice about the Markove switching model.

for your question sir

you can use the trade as a dependent variables to measure the liberalization,and independent column vector consist of GDP,population, openness,migration ,stability of country ,freedom as dummy variable,etc

Dear Fellows,

Are these results are ok

Transition Matrix Parameters

P11-C -0.236971 0.948605 -0.249810 0.8027

P21-C -1.687127 0.621755 -2.713491 0.0067

Goog morning.

Just a question, as I am not a specialist in this switching model issue.

In standard econometrics, using trade value as an indicator of trade policy is debatable. Indeed, it raises a very serious endogeneity bias (reverse causation in particular). This was the reason we build trade policy indices many years ago to estimate the impact of structural reforms on growth.

If such a risk exists in your case (as I suspect) then you have a problem.

Without entering into the significant data crunching involved in developing such policy indices, I suggest to look for ready-made policy indicators or use a mix if average tariff plus tariff variance to characterize trade policy without having to use trade flows.

Best wishes in your research

Hubert