Estimation of Mobile Telecommunication Demand Using OLS Method with Qualitative Information to Test Economic Crashing Time

Many countries have been facing the problem of how to represent the economic downtime, economic crashing or economic recession in order to make appropriate decision or policy intervention. For this purpose, the paper estimates mobile telecommunication demand for 10 years of 27 countries using Ordinary Least-Square (OLS) method with qualitative information as dummy variable. The dummy variable examines the economic crashing time in South Korea during 1997. The paper uses price of mobile (mobile cellular monthly subscription) in telecommunication industry, income of consumers and investment as three independent variables, while the number of mobile cellular telephone subscribers per 100 inhabitants is used as dependent variable. The results indicate that the higher the income, the higher would be the demand for mobile cellular telephone subscribers per 100 inhabitants and investment has no effect as t-statistic is less than 2. In the same manner, the dummy variable has no statistical significance at 5% level on the demand for mobile telecommunication during economic crashes. This implies that the effect of economic crash or economic downtime in South Korea in 1997 is statistically insignificant in relation to demand for mobile telecommunication