The main objective of this project is to apply the econometric methods that you have acquired from the course in order to demonstrate that you can create a reliable and useful model for capturing the potential relationship between variables of interest. This could be achieved as the following:
Select two or more than two variables that you are interested in and collect the data. Describe each variable and explain what the expected relationship between the variables is (i.e. what is your theory). Provide information about your sample period, data frequency and data source. Determine your dependent variable and motivate why. Make a graphical illustration of each variable and provide descriptive statistics for each.
Estimate the regression equation. Conduct diagnostic tests (i.e. tests for no misspecification, no autocorrelation (if time series data is used), homoscedasticity and normality). If any desirable assumption for a good model is not fulfilled, try to find a remedy.
Present the estimations of the selected model and explain what your estimation results imply.
It is recommended to organize your project in different sections. For example, in the first section you can describe what the goal of your project is and how you intend to achieve that goal. In the second section you can describe your theory in order to define your model. In the third section you can present your estimation results. The last section can provide summary and conclusions of your study. It is recommended to provide a reference list at the end of the final report. Hand in a printed copy of your project. You will be informed about the submission date later. It is important that you write your full name and student id number. Use EViews to do the estimations.