Faculty of Mathematics and Sciences Yogyakarta State University
Abstract
After being set as one of national target, Fishermen Term of Trade (NTN) has become a vital indicator for fisherman's welfare. For years, NTN is calculated based on the price of goods and services both in terms of production, costs and household consumption. While cost of consumption is based on actual data which was collected every month, the production refers to the volume of the base year, so it is less accurate in describing the actual condition. At the other side, dealing with State Budget planning, government needs to know how macroeconomic assumptions affect fisherman welfare. Therefore, the purpose of this study is to find a comprehensive model that simultaneously links the production side and economic indicator to predict NTN. Another focus is to investigate which estimation method is better, between Two Stage Least Squares (2SLS), as a single equation approach, and Three Stage Least Squares (3SLS), as a system approach. The study of Indonesian data from January 2008 – December 2012 shows that there are significant simultaneous relationships among production, macro assumption and NTN. The 3SLS gives better parameter estimates since it has less Mean Square Error (MSE) with R-sq=62.75%. But, in order to fit the NTN, the 2SLS gives a better prediction.
Keywords: fishermen terms of trade, simultaneous model, 2SLS, 3SL
