n n
d
r
t
s
Where n is the number of observations
) (
t t
RankY t d
.
t
RankY
is the rank of an observation at time . t
d) Rejection Rule:
Reject H0 if 2 /
r r
s
>
e) Computation of the value of the test statistic,
s
r
f) Making a decision based on the value of the test statistic,
s
r
and the pre-defined rejection
rule.
g) Conclusion:
If H0 is rejected, conclude with
% 100 ) 1 (
confidence that the series has a trend.
If
s
r
is negative, conclude that the trend is downward and if it is positive, it is upward.
If H0 is not rejected, conclude that there is no trend in series.
14
4.8.4 Estimation of the trend:
The researcher estimated a linear trend for the amount of fish (in tons) landed at KFLS and
marketed through KFA for the period 2000 to 2004. The model of the trend is of the form:
t t
t b b Y + + 2 1
(A)
Where
t
Y
is the volume of fish landed and marketed at time t .
1 b is the intercept of the fitted line.
2 b is the quarterly decrement in the volume of fish.
t
,
_
n
t
t
Y Y
Where
Y
is the mean of
.
t
Y
We derive two normal equations (B) and (C) on minimizing the sum that are used to obtain
constant coefficients.
( )
+ t b nb Y
t
2 1
..(B)
( ) ( )
+
2
2 1 t b t b tY
t
.(C)
On solving equations (B) and (C) simultaneously yields
( )
n
t b Y
b
t
2
1
( ) ( )( )
( ) ( )
2
2
2
t t n
Y t tY n
b
t t
Where n is the number of observations
4.8.5 Seasonality
A time series
t
Y
observed over L times per year at n t ,... 3 , 2 , 1 is said to have
seasonality if the average value of
t
Y
changes over time.
Assuming a multiplicative model of the form:
I C S T Y
t
(D)
Where
t
Y
is the volume of fish landed and marketed at time t .
T is a trend component in the time series.
S is a seasonal component in the time series.
C is a cyclic component in the time series.
I is an irregular component in the time series.
The multiplicative model treats a time series
t
Y
as a product of the components.
Under the multiplicative model, it is assumed that
L S
15
Where L is the length of seasonality.
It is further assumed that under Moving Average Method (MAM), C T CMA
Where CMA is the Centered Moving Average.
Therefore the specific seasonals are defined as
CMA Y I S
t
/
4.8.6 Hypothesis testing (II)
TESTING FOR SEASONALITY
The researcher tested for the presence of a seasonal component in the volume of fish landed
at KFLS and marketed through KFA for 2000 to 2004 using KRUSKAL-WALLIS RANK
TEST.
Procedure:
i) Hypotheses
Ho: There is no seasonality in the volume of fish landed and marketed
through KFA for the period 2000 to 2004.
Ha: There is seasonality in the volume of fish landed and marketed
through KFA for the period 2000 to 2004.
ii) Level of significance:
%) 5 ( 05 . 0
iii) Test statistic:
) 1 ( 3
) 1 (
12
2
+
1
]
1
N
N
R
N N
H
i
i
Where
i
R
is the sum of ranks of the specific seasonals
CMA Y
t
/
in the
th
i season.
i
N
is the number of specific seasonals in the
th
i season.
N is the total number of specific seasonals.
Where L is length of seasonality.
iv) Rejection Rule:
Reject
0
H
if
2
) 1 (
>
L
H
.
DECISION
Since
5398 . 0
s
r
is greater than
450 . 0
2 /
r
we reject the null hypothesis
0
H
.
CONCLUSION
We conclude with 95percent confidence that the series
t
Y
has a trend.
Since the Spearmans rank correlation coefficient is negative, we further conclude that the series
trend is downward.
5.3 ESTIMATION OF THE TREND
The researcher fitted a simple linear trend to the quarterly figures using model (A).
USING STATA
TABLE 5-2 Table of results
Where VOF represents the volume of fish in tons.
According the results in above, the intercept of the trend line is 1 b =3756.079 and its
slope is 2 b -61.24401.
Consequently, the trend equation is
t T 24401 . 61 079 . 3756 (E)
Base period: 1999 Quarter IV
t is quarterly and
t
Y
is in tons.
TABLE 5-3 Time
identification numbers
t
with their respective
trend values, T .
VOF Coef. Std. Error. t P>|t| [95% Conf. Interval]
t -61.24401 20.77184 -2.95 0.009 -104.884 -17.60399
Cons 3756.079 248.829 15.10 0.000 3233.309 4278.849
T
t
T
1 3694.8 11 3082.4
2 3633.6 12 3021.2
3 3572.3 13 2959.9
4 3511.1 14 2898.7
5 3449.9 15 2837.4
6 3388.6 16 2776.2
7 3327.4
17 2714.9
8 3266.1
18 2653.7
9 3204.9 19 2592.4
10 3143.6 20 2531.2
19
FIGURE 5-2 A Line graph of
t
Y
and the trend values
T
against the time number
t
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
time number t
V
o
l
u
m
e
o
f
f
i
s
h
(
i
n
t
o
n
s
)
Volume of fish Linear (Volume of fish )
5.4 FORECASTING THE TREND FOR 2005 AND 2006
Using the trend equation (E), we obtain the trend values by varying the time identification
number t in the trend equation. Thus the trend values for 2005 and 2006 are as shown in
Table 5-4.
TABLE 5-4 Forecast values for 2005 and 2006.
20
5.5 SEASONAL COMPONENT
The figure below shows a relatively repeated pattern year in year out and therefore there is cause
to suspect the presence of the seasonal component.
FIGURE 5-3 A Bar graph showing the volume of fish against the respective quarter for
the period 2000-2004.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2000 2001 2002 2003 2004
YEAR
V
o
l
u
m
e
o
f
f
i
s
h
(
i
n
t
o
n
s
)
Quarter I Quarter II Quarter III Quarter IV
5.5.1 Hypothesis testing (II)
TESTING FOR SEASONALITY
TABLE 5-5 Computational Table A
Year t T Year t
T
2005 21 2470 2006 25 2225
22 2408.7 26 2163.7
23 2347.5 27 2102.5
24 2286.2 28 2041.2
21
Year Quater t
t
Y
QMA 4
CMA CMA Y
t
/ Rank
2000 I 1 4283.96
1
II 2 3438.82
3
3731.27
9
III 3 2851.40
6
3562.14
8
3646.71
3
0.781911 2
IV 4 4350.92
5
3541.35
5
3551.75
1
1.225008 15
2001 I 5 3607.43
7
3500.77
3
3521.06
4
1.02453 11
II 6 3355.65
2
3399.46 3450.11
6
0.97262 6
III 7 2689.07
7
3309.41
3
3354.43
6
0.801648 3
IV 8 3945.67
3
3170.56
2
3239.98
8
1.217805 14
2002 I 9 3247.25 3143.27
8
3156.92 1.028613 12
II 10 2800.24
8
2984.36 3063.81
9
0.913973 5
III 11 2579.94
2
2863.97
1
2924.16
5
0.882283 4
IV 12 3309.99
8
2808.34
5
2836.15
8
1.167071 13
2003 I 13 2765.69
6
2644.61
1
2726.47
8
1.014384 10
II 14 2577.74
4
2506.24
1
2575.42
6
1.0009 8
III 15 1925.00
4
2694.88
7
2600.56
4
0.740226 1
IV 16 2756.51
8
2767.70
6
2731.29
7
1.009234 9
2004 I 17 3520.28
3
2842.19
4
2804.95 1.255025 16
II 18 2869.01
8
2943.74
7
2892.97 0.991721 7
III 19 2222.95
6
IV 20 3162.72
9
TABLE 5-6 Ranks in their respective quarters as obtained from Table 5-5.
Year I II III IV
2000 2 15
2001 11 6 3 14
2002 12 5 4 13
2003 10 8 1 9
2004 16 7
i
R
49 26 10 51
2
i
R
2401 676 100 2601
22
Thus
) 1 16 ( 3
4
2601
4
100
4
676
4
2401
) 1 16 ( 16
12
+
1
]
1
+ + +
+
H
H 12.728 and
348 . 9
2
) 3 ( , 2 / 05 . 0
DECISION
Since
) 728 . 12 ( H
is greater than
) 348 . 9 (
2
) 1 (
L