Loss Distribution of Drought Disasters in Yunnan Province Based on ECM Model

Abstract

This paper attempts to analyze the relationship between drought disaster area and direct economic loss in Yunnan Province based on the method of co-integration test and the error correction model. Firstly, the stationarity of the sequence is judged according to the auto-correlation and partial auto-correlation analysis diagrams of the sequence and the results of ADF test; Then, the OLS regression model of first-order difference sequence is established. Combined with the residual sequence of OLS estimation and the results of ADF test, it is concluded that the sequence has a co-integration relationship; Finally, the ECM model with error correction term is established. It is found that the model has a good fitting effect, and can well describe the short-term fluctuation and long-term equilibrium relationship between drought disaster affected area and direct monetary loss series.