Cheow, Yi Herng and Ng, Kok Haur and Phang, Chang and Ng, Kooi Huat (2024) The application of fractional calculus in economic growth modelling: An approach based on regression analysis. Heliyon, 10 (15). e35379. ISSN 2405-8440, DOI https://doi.org/10.1016/j.heliyon.2024.e35379.
Full text not available from this repository.Abstract
This paper establishes a fractional-order economic growth model to model the gross domestic product (GDP). The fractional-order model consists of a differential equation of integer and fractional orders, where the GDP is a function of several exploratory variables. An empirical application is adopted using Malaysia's GDP data from 1956 to 2018, incorporating exploratory variables such as total population, crude death rate, production of logs, gross fixed capital formation, exports of goods and services, general government final consumption expenditure, private final consumption expenditure, and the impact of investment. Extensive comparisons were carried out to evaluate the modelling performance of the full and reduced fractional order multiple linear regression models with the benchmark models, namely full and reduced integer-order multiple linear regression models. Results indicate that the reduced fractional-order model with six exploratory variables, excluding the crude death rate and production of logs, predominates other models for the in-sample model fitting based on the Akaike information criterion, coefficient of determination and other criteria. Furthermore, the fractional-order model offers the best-of-sample forecasts evaluated based on the root mean square forecast error and mean absolute forecast error. The application of the Diebold-Mariano test also serves to confirm the superior performance of the suggested fractional-order model, revealing a significant difference in forecasting ability between the fractional-order and integer-order models.
| Item Type: | Article |
|---|---|
| Funders: | Universiti Tun Hussein Onn Malaysia (UTHM) through GPPS (H425), TIER1 (Q380) |
| Uncontrolled Keywords: | Caputo fractional derivative; Fractional-order; Integer-order; Multiple linear regression; Economic growth model; Gross domestic product |
| Subjects: | Q Science > Q Science (General) Q Science > QA Mathematics |
| Divisions: | Faculty of Science Faculty of Science > Institute of Mathematical Sciences |
| Depositing User: | Ms. Juhaida Abd Rahim |
| Date Deposited: | 10 Apr 2025 07:42 |
| Last Modified: | 10 Apr 2025 07:42 |
| URI: | http://eprints.um.edu.my/id/eprint/46648 |
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