Table 8 Nonlinearities of undervaluation and service sector performance.

Speed of adjustment

 ECT

− 0.208***

(0.026)

− 0.318***

(0.092)

− 0.624***

(0.115)

− 0.942**

(0.358)

Longrun

 ln Capital

0.458***

(0.113)

0.274**

(0.071)

 ln Labour

− 0.262***

(0.081)

− 0.030**

(0.953)

 Growth

− 0.007*

(0.004)

− 0.001*

(0.047)

 Inflation

− 0.006***

(0.002)

− 0.003**

(0.007)

 ln Undervaluation

8.275**

(3.350)

6.916**

(3.041)

10.853***

(1.993)

10.270**

(5.303)

 ln Undervaluation²

− 4.947**

(2.177)

− 4.296**

(2.089)

− 6.644***

(1.325)

− 5.951**

(3.974)

Short run

 ln Capital

− 0.079***

(0.012)

− 0.242**

(0.114)

ln Labour

0.083

(0.206)

0.043

(0.207)

 Growth

− 0.000

(0.002)

− 0.008

(0.011)

 Inflation

0.001***

(0.000)

0.000***

(0.001)

 ln Undervaluation

− 4.040

(3.958)

− 3.126

(2.632)

− 0.129

(0.334)

0.716

(0.424)

 ln Undervaluation²

2.253

(2.400)

1.642

(1.570)

3.519

(3.990)

− 0.501

(8.673)

Constant

0.077***

(0.018)

0.152***

(0.054)

1.437

(3.506)

4.215

(4.895)

Observations

104

104

104

104

Diagnostic tests

 Hausman test (χ², p-value)

1.23

[0.5404]

2.87

[0.476]

− 

− 

 Wooldridge Autocorrelation test

6.504 [0.269]

18.119 [0.2381]

 Normality test

0.94 [0.625]

3.75 [0.1531]

 Heteroscedasticity test

121.27 [0.241]

25.09 [0.1110]