APPLI

Business &
GUIDELINES FOR THE ASSIGNMENT
• Due date: 15/01/2024 (Monday) at 2200hrs.
• This assignment should be done INDIVIDUALLY (no GROUP work!)
• The assignment is a part of your learning process. This is particularly important since
the questions will be absolutely essential practice for the final exam. Economics F
• Plagiarism will cause you to fail this assignment. Never copy and paste any material
from another source. However, using references with proper citations is highly
encouraged.
• Please answer the questions in the same order that is given below; otherwise, it may
lead to confusion as your work is marked.
• The assignment should be typed. Sloppy work will not be accepted.

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INFORMATION Banking and
The aim of this assignment is to investigate the determinants of economic growth (GDP).
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BANK
• Economic growth
• Foreign direct investment
• Inflation
• Interest rate

QUESTIONS

1) Preliminary check
a. Graph the variables and comment on the relationship between GDP and
the other variables.
b. Considering your enquiry from part (a) of question 2, what are your
expectations on the determinants of economic growth? EMU

3) Regression output
a. Write your estimated model and comment on the coefficients (Interpret
them).
b. Comment on the overall quality of the model by using several measures.

4) Diagnostic examination
a. Check your model for normality. Run normality diagnostic test and
explain your results.
 b. Check your model for multicollinearity. If there is MC, explain your solution to this
problem. Show your work.
c. Check your model for heteroscedasticity. If your model has the problem of
heteroscedasticity, then solve this problem. If measures used do not solve
multicollinearity please indicate this. Show your work.
d. Check your model for autocorrelation. If your model has the problem of
autocorrelation, then solve this problem. If measures used do not solve
autocorrelation, please indicate this. Show your work.

5) Economic interpretation
a. Are your results compatible with your prior economic expectations? (your
expectations from question 1. b)
b. What other factors should be included in your model to have a better understanding
of the determinants of economic growth?
c. What is your policy recommendation for a faster GDP growth for this economy?