1. Empirical Essay Overview

Goals: This empirical essay is aimed to improve your learning experience and train practical skills such as effective written communication, critical thinking and applying knowledge to real world issues. Importantly, it provides you a stepping stone to the dissertation. You are expected to apply the OLS estimation to a regression model to analyse the real world data.

Timeline: The essay and the corresponding Eviews file is due on Wednesday.

Format: The essay shall use:
 2.54cm(1‐inch) top, bottom, left and right margins,
 1.5 line spacing,
 Font Times New Roman size 12, and
 The maximum number of pages: 10 pages for the main text (from introduction to bibliography) and up to 3 pages for appendix. The main text shall include any important graph and data tables. Any detailed and additional information can be provided in the appendix. Note an appendix is not compulsory.

Successful Project: In content, a successful project will make a good use of the estimation and hypothesis testing method introduced in class. In presentation/writing quality, a successful project will not only comply with the above formatting criteria but also meet standards of good paper writing.

Data source suggestions: It is advisable to consider macroeconomic variables, which are easy to collect from websites.

 The followed website may be a helpful data source
www.gov.uk/government/topics/uk‐economy for UK data
www.imf.org for data from countries all over the world
www.ons.gov.uk for UK data
ec.europa.eu/Eurostat for Euro area data
fred.stlouisfed.org for US data
Reuters T.1 database (computers in Gask 202 can be used following instructions on the Library Electronic Data sources pages)

 Make sure to reference all sources that you use!
Choice of topics: Any model/theory that describes the relationship among variables can be considered as long as relevant data are available. Followed are some examples on topics that you can consider:

 Feldstein‐Horioka Puzzle: This is about the relationship between investment (as a ratio to GDP) and savings (as a ratio to GDP)

 The relationship between interest rates and the growth rate of housing prices
 The relationship between a company stock return and an index (CAPM)

2. Empirical Essay: Structure of the project

This section gives you a guideline as to how you should present your project. It needs to look professional and consistent throughout.
A guide on how to write Economic Essay can be found in BBL. Please refer to section 17 of “A Guide to Writing in Economics” by Paul Dudenhefer for detailed guidance on how to present and discuss results.

Empirical Essay: Introduction

The introduction sets the scene for the main body of the project. It raises the questions that inspired your research interest and sets them in context. Whether the research is inspired by a contemporary issue or by a (technical) problem raised in the academic literature, it should be put in its broader conceptual context. Give a brief explanation of what you are doing in this essay (summarise the question), what you aim to
achieve. Following aims and objectives, adopted methodology shall be described and potential contributions  of the essay are explained. The final paragraph in the introduction is typically a brief list of the sections of the essay and their contents.

Empirical Essay: Literature review

This part critically reviews the relevant research literature and provide a synthesis of it, leading to your specific research questions. Obviously you cannot cover all literature on all topics related to your research question; it requires your skills to determine what is most relevant and how each piece of the puzzle (reference) fits in relation to your research question.

Empirical Essay: Data and methodology

The data part sets out the facts used in the analysis. The content will vary according to the topic. It can just describe the trends and characteristics in your main data series, or give more detailed  information on the variables used.

In all cases you must explain why and how you chose your data: where do they come from, how did you select your sample, what (if any) limitations there are.

The methodology part contains description and discussion of the underlying economic theory and methods of analysis. It is important that you explain why you chose a particular regression model, given the nature of the topic and the data you use. You need to discuss the estimation method you are going to use and why it is appropriate.

Empirical Essay: Results and analysis

This part is the core of the essay. It provides the precise, concise and complete empirical analysis on the data that you have.

Results from the OLS estimation and the hypothesis testing shall be presented properly and discussed accordingly in the context of the underlying economic theory/model.

You shall not copy and paste estimation output from Eviews directly into the main text. You are expected to go into detail with any econometric knowledge you have gained as you go along. You also need to reference as you go along. For more detail as to how to reference, see Section 4.

Empirical essay: Conclusion

In the conclusion you should show the overall significance of what has been covered. You may want to remind the reader of the most important points that have been made in the essay or highlight what you consider to be the most central issues or findings. However, no new material should be introduced in the conclusion.

Bibliography

See material in Section 4 on populating the Bibliography.

3. Citations and Avoiding Plagiarism

All sources (e.g. books, articles, surveys…) that are sufficiently relevant to your essay must be accurately listed in a bibliography at the end. It is essential that references are given, indicated in the text by author’s
name and year of publication. A good practice involves using references for ideas, which are then expressed in your own words; using direct quotations sparingly and only where they add to or support your own argument.

You should use the “name and year” system. For example, you might write the following: “The mechanical use of large‐scale econometric models in policy analysis is criticised in Lucas (1976).” or “Considering the Lucas critique (Lucas, 1976), …”.
When referring to a book, the in text reference has the same form. For example, in the text you might write as follows: “An important example of this principle is described in chapter 3 of Blanchard, Amighini and
Giavazzi (2012).”