GMM Estimation and Shapiro-Francia Normality Test: A Case Study of CEE Economies

The present paper estimates the link between GDP per capita, inflation (GDP deflator), exports, imports, final consumption, gross capital formation, tax revenue and public expense of CEE countries (Bulgaria, Romania, the Czech Republic, Slovak Republic, Poland, Slovenia and Russia) using GMM estimation for the period 2005-2010. Besides, we run Shapiro-Francia W test to indicate the patterns of normal distribution among samples of our study. The objective of this quantitative empirical is twofold: first, it examines the linkages of economic indicators of CEE countries in order to find out the main changes of economic landscape. Second, it aims at highlighting the development of CEE countries on the way of deeper convergence to the euro area utilizing the available panel series. We find that GDP per capita of CEE countries is in negative relationship with expense, final consumption, gross capital formation, exports and inflation. With regard to Shapiro-Francia W test, we assume that variables show a normal distribution.