The project aims to provide hands-on experience in conducting applied econometrics work and communicating econometric results to non-econometrically literate readers.
You are required to choose a topic for your project. The purpose of this project is to use multiple regression analysis to build an explanatory equation for the dependent variable of your interest. The sample of your data must include at least 30 observations (it would be preferable to analyse larger samples). Write a report, containing answers to the following questions:
(1) Comment on the expected relationships between your dependent and explanatory variables.
(2) Perform and interpret a multiple regression.
(3) Apply the methodology of hypothesis testing to investigate if your empirical findings are consistent with the theoretical expectations. Comment on your findings.
(4) Apply relevant diagnostic tests to check for model specification error, multicollinearity, heteroscedasticity and autocorrelation. Comment on what could you do to improve the performance of the multiple regression. If possible, take appropriate course of action to address the issue.
The word limit of this report is 2000, excluding references and appendices. Note including irrelevant discussion in your report will be subjected to penalty.
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Structure guideline
I. Introduction: states the objectives of the project and defines the dependent variable
II. Literature review: a short review of relevant previous literature and research. Based on this, a (set of) hypothesis should be developed illustrating the relationship(s) between explanatory variable(s) and dependent variable.
III. Data: a description of the data, data sources, variable measurements, descriptive statistics (including correlation matrix) and any irregularities with the data
IV. Model specification: a presentation of each model specification, following the standard format adopted in the main textbook. If you estimate more than one specification, be sure to evaluate and explain which one is the preferred specification.
V. Analysis: a careful analysis of the regression results that includes
a. a discussion of any econometric problems including these identified by diagnostic tests you applied and
b. a discussion of hypotheses test results
c. a discussion of estimated coefficients
VI. Conclusion: a short summary of your findings and a brief discussion of the implication of your findings and/or suggestions for future research.
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