Diversification of Agricultural Areas in Indonesia using Dynamic Copula Modeling and K-Means Clustering

Agriculture is one of the main pillars of economic growth in Indonesia. Failure in this sector can result in faltering economic stability of the country. Thus, to minimize these failures, mapping of areas with particular commodity potential is needed. One of the main factors affecting the growth of crops is rainfall. Therefore, this paper aims to model the potential distribution of commodity growth based on rainfall precipitation using dynamic copula. The modeling results are then used as a basis for grouping the potential of food crop commodities in Indonesia. The determination of the group was carried out using the k-means clustering method. We expect that the result of the modeling can provide an overview for farmers or the government to make policies related to the optimization of Indonesia's agricultural sector. This result will enable the government to offer facilities that can minimize agricultural losses, such as superior seeds that are resistant to weather changes and the provision of training for enhancing farming skills. In addition, it is also suggested to diversify farm areas to reduce the failures due to dependence on a single agricultural product.

Reflection of government performance from foreign exchange market through engineered mechanism using conditional copula model

This paper investigates governments’ performance in the country. We achieved this objective differently. We employed an inverse method of assessment, with the utilization of factor copula modeling technique, to study the dependence relationship of exchange rates returns as auxiliary variables, the performance of political and army government tenures in the country in the last two decades are evaluated. Through factor analysis, common factors for the exchange rate are obtained. The analysis shows that conditioned on the common factors, the dependence amongst the elected currencies are strongly asymmetric in most of the tenures except the term of Pakistan Muslim League-Nawaz, and condition on common factor Clayton copula demonstrating hypothesis is more suitable. However, we perceive high left tail reliance among foreign currency returns during Pakistan Muslim League-Nawaz tenure, and the condition on common factor Gumbel copula molding assumption is more appropriate. We are signifying the foulest government performance in the country among all occupancies under consideration.

Copula modeling for discrete random vectors

Copulas have now become ubiquitous statistical tools for describing, analysing and modelling dependence between random variables. Sklar’s theorem, “the fundamental theorem of copulas”, makes a clear distinction between the continuous case and the discrete case, though. In particular, the copula of a discrete random vector is not fully identifiable, which causes serious inconsistencies. In spite of this, downplaying statements may be found in the related literature, where copula methods are used for modelling dependence between discrete variables. This paper calls to reconsidering the soundness of copula modelling for discrete data. It suggests a more fundamental construction which allows copula ideas to smoothly carry over to the discrete case. Actually it is an attempt at rejuvenating some century-old ideas of Udny Yule, who mentioned a similar construction a long time before copulas got in fashion.

A closer look at stochastic frontier analysis in economics

Purpose While there exist many surveys on the use stochastic frontier analysis (SFA), many important issues and techniques in SFA were not well elaborated in the previous surveys, namely, regular models, copula modeling, nonparametric estimation by Grenander’s method of sieves, empirical likelihood and causality issues in SFA using regression discontinuity design (RDD) (sharp and fuzzy RDD). The purpose of this paper is to encourage more research in these directions. Design/methodology/approach A literature survey. Findings While there are many useful applications of SFA to econometrics, there are also many important open problems. Originality/value This is the first survey of SFA in econometrics that emphasizes important issues and techniques such as copulas.