MGDI72162

Contemporary issues in development finance 2020/2021

ASSIGNMENT #1

(100% of final mark)

The essay should be submitted via Blackboard before 2:00PMon 27 th April 2021

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WARNING:

● The University has a strict policy on plagiarism. Unacknowledged copying of another person’s work will result in the automatic failure of the assignment and may lead to disciplinary action being taken against the study fellow. Your answer must be fully referenced where appropriate. For guidance on how to make sure you avoid plagiarism and other forms of academic malpractice, please consult your handbook.

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Assignment Weight: 100% of the final mark

12pt font size, with 1.5 or double line spacing. Word limit:3500 words essay (excluding references, tables, and abstract).

Choose one of the following questions.

Essay Question 1:

Using data for 30 low-income group countries and 30 middle(lower middle income or upper middle income)/high-income group countries investigate whether stock market development leads to an increase in economic growth.

1. Your sample should cover the period 1975-2017 and should exclude the following industrialised countries:Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, UK, US.

2. Your analysis should be conducted using a selection of statistical methods: for example, usingdescriptive tools (e.g., scatterplots) and regression analysis.

3. Carefully interpret each bit of empirical evidence you present. By which we mean you need to link your findings to the essay question. Your results need to be used to produce evidence in support or against, or in some instances both (e.g., support for some countries and against for others), the arguments you present.

Notes: Essay question 1

1 Scatter plot: For the scatter plot, although Stata is strongly recommended, you are allowed to use other software packages if you wish to do so. The only requirement is that in your scatterplot the country identifier should be visible.

Further, if you plan to use scatter plots for the whole time period (1975-2017) you will have to take average value for each country. You can also analyse the variables by breaking into several sub-periods (eg, 1970-75; 1975-80 etc.) by averaging information for each period.

2. Data availability: Please note that in some instances, you may not have information for all the countries from 1975-2017. This is perfectly understandable. Please don’t worry about this. The idea behind the providing sample period is to use data as much as possible based on the availability. From the perspective of developing your research skills, you should use all the available information effectively. So, the sample period and the number of countries to be covered which is given in the question is to provide you with a direction, but not steadfast (on the condition that the data is unavailable).

3. Use the literature, and your learning from Quantitative Methods courses, to identify the appropriate Methodology. If you try to replicate the methodology used by other Authors, this should be acknowledged by appropriately citing them. Use standard academic sources to search fo rpublications and also use your reading list to identify relevant literature.

Essay Question 2:

Financial development has an impact on how income is distributed in the economy. While many would agree with this idea, it is still controversial whether its effect relieves or exacerbates inequality and whether it is significant.

Using one or more proxies for financial sector development (obtained from the World Bank’s Global Financial Development Database) and data on income inequality (e.g., from the World Income Inequality Database, University of Texas Inequality Project, World Wealth and Income Database, World Development Indicators), discuss whether the above idea is empirically valid.

For your analysis, you should:

1. Choose a sample of at least 45 countries, composed of 10 OECD countries and the remainder of developing/transition economies.

2. The analysis should be conducted using a range ofstatistical approaches, including a selection ofdescriptive statistics, scatter plots, and regression analysis.

4. Carefully interpret each bit of empirical evidence you present. By which we mean you need to link your findings to the essay question. Your results need to be used to produce evidence in support or against, or in some instances both (e.g., support for some countries and against fro others), the arguments you present.

Notes: Essay question 2

1. We are not providing any sample period here as the student can decide about it. It is perfectly understandable if you cannot cover all the 45 countries mentioned in the question because of the data unavailability. Please don’t worry about it. The idea is to use as much information on countries as possible based on the availability. The sample of 45 countries to be used is to give you a direction, and not steadfast solution (on the condition that the data is unavailable).

2. Use the literature, and your learning from Quantitative Methods courses, to identify the appropriate Methodology. If you try to replicate the methodology used by other Authors, this should be acknowledged by appropriately citing them. Use standard academic sources to search for publications and also use your reading list to identify relevant literature.

3. Scatter plots: If you plan to use scatter plot, please read the relevant section (scatter plot) under notes for Essay question 1.

Essay question 3

Dimensions of financial development (e.g., financial depth or access to finance) show large variations across countries. Why? Empirically investigate the factors explaining why one economy may have higher levels of financial development than others.

For your analysis, you should:

1. Use variables for financial sector development (obtained from the World Bank’s Global Financial Development Database or World Development Indicators).

2. The analysis should be conducted using a selection of statistical methods, which may include descriptive tools(e.g., descriptive statistics and graphs), and regression analysis.

3. Carefully interpret each bit of empirical evidence you present. By which we mean you need to link your findings to the essay question. Your results need to be used to produce evidence in support or against, or in some instances both (e.g., support for some countries and against fro others), the arguments you present.

Notes: Essay question 3

1. We are not providing any sample period or the list of countries to study. Explain why you choose a certain country or sample of countries.

2. Use the literature, and your learning from Quantitative Methods courses, to identify the appropriate Methodology. If you try to replicate the methodology used by other Authors, this should be acknowledged by appropriately citing them. Use standard academic sources to search for publications and also use your reading list to identify relevant literature.

3. Scatter plots: If you plan to use scatter plot, please read the relevant heading (Scatter Plots) under notes provided in Essay question 1.5

Suggested essay structure:

o Introduction

A brief survey of the related theoretical and empirical literature (hint: you should be keep this part very focussed, otherwise you will have no space left for the empirical analysis and interpretation of the results)

o Description of the data and methodology

o Analysis

o Conclusion

o Appendix

o References