LUBS3370 - Applied Econometrics Semester 1 - 2023/2024
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(Semester 1 - 2023/2024)
Assessed Coursework
LUBS3370 - Applied Econometrics
100% Individual Assignment
Students are individually required to conduct 3000 words (max) individual research project on the Determinants of inflation while focusing on the period 2000Q1 – 2023Q2. The research project counts for 100% of the final grade. You will focus only on the three determinants of inflation i.e., broad money supply, effective exchange rate and energy prices.
There are three parts (A–C) to the coursework.
Part A (40 Marks): You need to choose only one country for this part. It can be any country in the world but MUST NOT BE the UK. You will be required to collect the data on inflation rate, effective exchange rate, broad money supply (M3) and global energy prices from 2000Q1 to 2023Q2 for your chosen country.
The data must be collected from reliable sources. One of the potential source for data on inflation (CPI) is the OECD database.
https://data.oecd.org/price/inflation-cpi.htm , however, you can use any reliable/official source (for example, International Monetary Fund- International Financial Statistics (IMF-IFS) and can also choose a country which is non-OECD. But, in any case, you must mention the source of data and also provide the dataset as an appendix. For the broad money supply, you can also use the OCED database https://data.oecd.org/money/broad-money-m3.htm
For the exchange rate, you can use the BIS effective exchange rate. https://www.bis.org/statistics/eer.htm
For the energy prices, you can use the Global Price of Energy index. https://fred.stlouisfed.org/series/PNRGINDEXQ
You may have to do the necessary transformation of data to match the frequency.
Before, you analyse the collected data, you need to write an introduction focusing on relevant literature on the determinants of inflation. Specifically, you focus on the money supply, energy prices and exchange rate as determinants of inflation and conduct a 600 words literature review. After the review of the literature, you need to analyse the data.
Provide the summary statistics of the dataset.
Please estimate inflation as an ARMA model where the model is selected based on information criteria. Please present results professionally in Tables and discuss/interpret them.
Please specify the ARDL model in the summation form.
The specified model ARDL model is to be estimated. The lag length should be based on the information criteria. Please present results professionally in Tables and discuss/interpret them.
Part B (40 Marks): For Part B, you need to include 4 more countries in the analysis, making 5 countries in total. At this point, you can include the UK if you wish to, though it is not compulsory.
After the collection of data, you need to do the panel estimation using Pooled OLS, Fixed and Random Effect Models. Please present results professionally in Tables and discuss/interpret them.
You also need to do the necessary procedure to find out which is the most appropriate model among POLS, Fixed and Random Effects and comment on your findings.
Part C (20 Marks):
For part C, you are required to use the discreet choice model. But let’s assume that the countries you have chosen have an inflation target of 2% i.e. the central banks try to keep the inflation at 2% or lower.
Please create a new dummy variable Inflationtarget taking values of 0 and 1. It should take the value of 1 if the inflation in the given quarter is within target otherwise it should take the value of 0.
Estimate either a logit or a probit models and present your results professionally.
Calculate the average marginal effects and marginal effects at mean/average and interpret the results with respect to the energy prices.
Please also include a short conclusion section (Appx. 200 words) at the end of the coursework.
Note: Your literature needs to be adequately cited with a reference list at the end. For further information on Harvard Referencing style please look at https://library.leeds.ac.uk/info/1401/academic_skills . You must provide all the STATA outputs in the appendix. The STATA outputs should not be directly copied and pasted into the body of coursework to show the results. For the results, you should make Tables which include relevant outputs and statistics.
Assignments should be a maximum of 3000 words in length.
All coursework assignments that contribute to the assessment of a module are subject to a word limit, as specified on the assessment brief. The word limit is an extremely important aspect of good
academic practice, and must be adhered to. Unless stated otherwise in the relevant module
handbook (if one has been provided), the word count includes EVERYTHING (i.e. all text in the main body of the assignment including summaries, subtitles, contents pages, tables, supportive material
whether in footnotes or in-text references) except the main title, reference list and/or bibliography and any appendices. It is not acceptable to present matters of substance, which should be included in the main body of the text, in the appendices (“appendix abuse”). It is not acceptable to attempt to hide
words in graphs and diagrams; only text which is strictly necessary should be included in graphs and diagrams.
You are required to adhere to the word limit specified and state an accurate word count on the cover page of your assignment brief. Your declared word count must be accurate, and should not mislead. Making a fraudulent statement concerning the work submitted for assessment could be considered
academic malpractice and investigated as such. If the amount of work submitted is higher than that specified by the word limit or that declared on your word count, this may be reflected in the mark
awarded and noted through individual feedback given to you.
The deadline date for this assignment is 12:00:00 noon on 14th December 2023.
An electronic copy of the assignment must be submitted to the Assignment Submission area within the module resource on the Blackboard MINERVA website no later than 12:00:00 noon prompt on the deadline date.
Faxed, emailed or hard copies of the assignment will not be accepted.
Failure to meet this initial deadline will result in a reduction of marks, details of which can be found at
the following place:
https://students.business.leeds.ac.uk/assessment/code-of-practice-on-assessment/
SUBMISSION
Please ensure that you leave sufficient time to complete the online submission process, as upload
times can vary. Accessing the submission link before the deadline does NOT constitute completion of submission. You MUST click the ‘CONFIRM ’ button before 12:00:00 noon for your assignment to be classed as submitted on time, if not you will need to submit to the Late Area and your assignment will be marked as late. It is your responsibility to ensure you upload the correct file to the MINERVA, and that it has uploaded successfully.
It is important that any file submitted follows the conventions stated below:
FILE NAME
The name of the file that you upload must be your student ID only.
ASSIGNMENT TITLE
During the submission process the system will ask you to enter the title of your submission. This should also be your student ID only.
FRONT COVER
The first page of your assignment should always be the Assessed Coursework Coversheet (individual), which is available to download from the following location:
https://students.business.leeds.ac.uk/forms-guidance-and-coversheets/
2023-11-22