A Macroeconometric Model for the Sudan Economy: Empirical Evidence from Error Correction Framework 1956-2010

Abstract

This paper aims to build a macroeconometric model for the Sudan economy to be used as an analytical tool to describe the operation of the economy. The model comprises six equations built around the Keynesian identity with 12 macroeconomic variables. Based on error correction model framework, Engle-Granger two steps method was followed and a system of simultaneous equations was estimated by Three Stages Least Squares. The empirical results show that the error correction terms which exemplify the disequilibrium state and the short-run and long-run effects got the right sign and magnitude.