GROUP-PROJECT

The purpose of this project, among others, is to

(i)Familiarize yourself with how to handle data

(ii)Specify, develop and estimate a basic OLS multiple regression model

(iii)Test and interpret hypothesis, create and interpret confidence intervals

(iv)Test and validate the relevant OLS assumptions

(v)Construct models to fix any violations of the assumptions (omitted variable bias, collinearity, heterskedasticity, serial correlation etc)

(vi)Assess your findings and present the results, limitations and suggestions of areas of further research

Students will self-select into groups of no more than 4 members. The group will undertake a project with an empirical element (regression analysis) by applying the tools and techniques introduced in the course. This application will apply to any economic or business related question of interest to the group but in consultation with the instructor.As the model builder, the group must use good sense and good theory in the application.

Below aresomepotential topics:

•Empirical estimates oftrade elasticities (estimatingtheJ-curveeffect)

•Does law ofonepricehold?

•Does Uncovered Interest Parityalways hold?

•Relationship between the exchange rate and anymacroeconomicaggregates

•Is there a relationship between the currentaccount deficits in theU.S. and savings glut in China?

•Importanceofmonetarypolicyshocks in exchange ratemovements (Is monetaryshocks reallyimport in drivingshort-term exchangeratemovements?

•Does money buy longevity; a cross country analysis

•Alternative Factors to College Success

•Canadian International Finance

•Employee Benefits and Their Impacts on Unemployment Rates in Canada and U.S

•Demand for Television. (Here you can insert any product)

•The Effect of Executive Compensation on Corporate Performance

•Wage Determination on Entertainers

•Underlying Factors of Crime Rate in America

•Determining the Price of Television Ads

•The Effects of Income (and other factors) on the amounts of donations to Charities

•The Impact of Credit Card Incentive Packages on Consumer Borrowing

•Analysis of College Undergraduate Studying Time

Project Timetable

  1. Groups must be formed by September 22nd 2016
  2. A topic must be chosen by October 1st, 2016. Your project topic must be approved by your instructor so you need to make appointment for this purpose
  3. Project proposal is due in class on October 20, 2016
  4. 20 minute oral presentations on November 22nd , 24th and 29th if required
  5. Final Project write up due on December 5th, 2016. There will be no extensions of this date under any circumstances

Project Proposal (5%)

The proposal is a brief summary of your empirical project. Please keep this under 5 pages, double spaced, 12 point font. The page limit includes any tables, graphs, or references.

A well written proposal should include the following elements:

  1. Title: A title for the project (e.g. Exchange Rates in the Long Run: Deviations from Purchasing Power Parity).
  2. Objective/Motivation: Define the question you are trying to answer and describe the reasons for your interest in the project or give some perspective on why people should care about this issue. (e.g. The project will survey research in the area of purchasing power parity to try and address the question of why there are deviations from PPP. PPP is an important theory for exchange rate determination, if this theory does not hold empirically, it would be important for economists to refine the theory. Also, PPP is often used in development economics to calculate living standards, poverty, allocations of aid, and projections of growth, consumption, etc. The results could be seriously biased if PPP is not an appropriate method to implement……….).
  3. Literature Review: Write a summary of at least 3 previous research (including your companion paper) done in the general area of your project.
  4. Methodology: Describe the kind of statistical methods you might implement to achieve your objective. (e.g. Detail the type of regression analysis you’ll conduct, perhaps a replication of some of the regression analysis in the journal articles you read to test for PPP convergence or divergence)
  5. Data: Describe the data you would need and how you would find/collect that data, or, cite the actual data sources if you already found the data. (e.g. IMF, Federal Reserve Bank websites)
  6. Reference: Reference each of the journal articles or other sources you cite.

Note that the citation and reference style for economics papers is very specific. For the avoidance of doubt, follow the format used in the bibliography of your companion paper. I will mark off points for incorrect or sloppy citations or references. Please refer to chapters in your text about how to undertake and write empirical researchfor help on this issue.

Oral Presentation (5%)

Refer to the datesreserved forprojectpresentations. Up to 3 presentations will begiven during each class period. Each presentation will be20 min, with an additional 5 min forquestions. Theseclasses mayrun a little longerthan the scheduled class time, sopleasebereadyto stayalittlelonger.

NOTE:Attendanceis required onthepresentationdates.

Obviously20 minutes will not be enough time foryou to talk about everythingthat’s related to theparticulartopicyou have chosen, so it is important to pick out and present certain elements fromyour research in aconcise and clearmannersuch that the class canget agoodgrasp ofthe issuesyou aretryingto address. Each team member can taketurns to present, ortheteam may choosethemost well-spoken team memberto present.

I expect everyoneto activelyparticipatein thequestion session ofthepresentation. A portion of theoral presentation scores will be allocated to that. This should provideincentives foryou to payattention to thepresentations and encourageyou to raiseinsightful questions after each presentation.

Final ProjectWrite-up(15%)

This would be an elaboration oftheideas put forthin theproject proposal and presentation. This is the chanceto putyourown personal touches into theproject!Pleasekeep this under20 pages (this is an upperbound!Iwelcomeshortermore concisepapers!), doublespaced, 12 point font. Thepagelimit includes anytitlepage, tables,graphs, and references.

I expect the final project write-up to be formattedlike an economics journal article (introduction, literaturereview, data& methodology, results, conclusion, references). . The grade forthewrite-up will depend on both thequalityofthewriting(howclearit is and howwell formatted it is) as well as the empirical work.

PROJECT DETAILS

Guidelines for Final Paper Format

These guidelines describe the format you should use when writing your paper.

Abstract: a brief summary of what you did and your findings. No more than 250 words

Sections:

  1. Introduction
  1. Statement of research question (What is relationship you wish to examine? What is your main independent variable and what is your dependent variable?) Note: this must appear in 1st or 2nd paragraph
  2. Motivation (Why is your question important? Why do we need to understand the relationship between your main independent variable (X) on your dependent variable (Y)?)

II. Literature Review

  1. Cite at least 4 economics papers (one of which must be your companion paper)
  2. For each paper, write 1-2 paragraphs describing what question the paper seeks to answer, what data is used, and what the key findings are. Discuss also how these results relate to the question you are attempting to answer in your paper.

III. Data.

  1. Describe the data you will use to test your research question, including but in no particular order:

(i)Describe the source of the data

(ii)Describe which variables it contains

(iii)Describe the timeframe for the data

(iv)Describe the unit of observation (an individual, country, year? Etc)

(v)If you have made choices to limit your analysis to certain years, companies, countries etc, justify your choices (you may use the theory to justify these choices or the availability of the data etc)

  1. Cite and refer to your descriptive statistics table within this section to help your discussion of describing the data

IV. Results

  1. First run a simple regression of your dependent variable (Y) on your main independent variable (X) i. Describe the regression results – interpret the coefficient estimate for X, explain whether it is statistically significant, discuss the R-squared
  2. Next move to the multiple regression framework i. Think about Omitted Variable Bias – does the simple regression you ran in (a) give an unbiased estimate of the relationship between X and Y? Think of some (at least one) variable that, if omitted, potentially causes your estimate in (a) to be biased. Go through the logic of what direction the bias should be, and provide a discussion. Then include that variable in the regression.
  3. Think about what other variables you might want to add as controls and what other modifications to the regression equation you might want: i.e. which additional variables to include, interactions, and functional form. Carry out those changes and report your findings.

For each additional regression:

Interpret your findings in words; do your results support your main hypothesis?

Explain why the coefficient of interest (the coefficient on your main X variable) does or does not change between regressions

Interpret the coefficients on the additional X variables – i.e. how do these variables relate to the dependent variable Y? Also, particularly in the case of interaction terms, how do these variables alter the interpretation of the relationship between your main X variable and Y?

Discuss which regression equation fits the data best

  1. Finally, discuss shortcomings of your research (For example, are there further omitted variables that you don’t have any data for? If so, how would this affect the estimated coefficient of interest? Is it biased? In what direction – larger or smaller? Why? )

V. Conclusion a. Summarize your topic and findings

VI.Works Cited

Format: follow format used in the bibliography of your companion paper.

VII. Tables a. Descriptive Statistics Table

b. For each regression, include a print out of the regression results from EViews