ASSIGNMENT 2

Instructions, Guidelines & Rubrics

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INSTRUCTIONS
i. This assignment is a GROUP type of assignment.

ii. Form a group of 4 people.

iii. A Macroeconomic Topic is assigned to each group.

iv. Conduct a QUANTITATIVE ANALYSIS as demonstrated in class.

v. Write and submit the report analysis.

vi. The DUE DATE: SUNDAY WEEK 13

Submit in the form of softcopy & hard-copy
i. Softcopy : @MyGuru
ii. Hardcopy:a. at my office (10.3.40 – right-wing), Block 10
Or
b. Post to:
PM Dr. Norasibah Abdul Jalil
No. 5, Jln. 6/36, Blok 6, Bandar Tasik Puteri,
Rawang, 48020, Selangor [Tel.: 0193932512] 2
Topics Assigned by group

NO. TITLE GROUP

The impact of changes in interest rates and
1 money supply on the inflation rates. 1 5 9 13

The impact of changes in the stock market and

2 investment level to the economy. 2 6 10 14

The impact of changes in the exchange rates and

3 net export to the economy. 3 7 11 15

The impact of Fiscal Policy (G) and Monetary

4 policy (MS) to the economy 4 8 12 16

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GUIDELINES & DEMONSTRATION

STEP BY STEP PROCEDURE OF AN IN-CLASS WORKSHOP ON REGRESSION ANALYSIS

1. Determine the TOPIC [ Example: The impact of changes in monetary policy (MS3) and INF on GDP]

2. Identify and find the data involves

GDP, MS3 and CPI*
*Cpi Functions:
• CPI is to generate inflation variable
• CPI is to transform nominal data to real data

3. Develope the model specification for the analysis.

General model specification  Y = f (X1, X2......Xn)
For existing study  GDP = f (MS , INF)
(Dep.) (Independent)
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4. Find and key-in data in Excel
5. Do data generation, transformation (treatment) and data generation.

i. Data Generation
To generate INFr from CPI
CPI  INFr
Formula: [(CPIY1 - CPIY1-1)/CPIY1-1]X 100

ii) Transform nominal data into real

GDPn GDPr  Formula: [GDPn / deflator]
1. 2. 3.
[GDPn / (CPI/100) ANALYSES
Yn Yr Ylog10
MS3n  MS3r Formula: [MS3n / deflator]
[MS3n / (CPI/100)]
iii. Data log
Log10 the GDP and MS variables.
Why log?  To neutralize the values.

Note:
data need to to be transformed from nominal to real and then log10 [√ ]
For indices data: juz directly log
For data already in real value: juz directly log
For data in %: eg. UNr, INFr, Ir no need to transform or log; data can be directly used.

[lets do Demo for 4 & 5: A2.2 – see next page] 5

6. DATA KEY-IN: [A2.1 - the data - data key-in and data treatment.xls]

7. DATA ANALYSIS [in class Demo]

• Analysis 1: Generate graphical Illustration (Excel)

• Demo: A2.1 - the data - data key-in and data treatment.xls
Note: line graphs sample report: pls google search
• Eg: https://ieltsliz.com/how-to-ielts-line-graph/

• Analysis 2&3: Correlation & Regression Analyses (SPSS)

• Demo: Setting up the SPSS spreadsheet
• Open [IBM SPSS Software].
• Take note of the following two buttons at bottom left:
• variable view [to do variable setup]
• data view [spss spreadsheet to copy paste and analyze data]
• Watch Demo for details
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 Analyses 2 & 3: SPSS Software
• Analysis 2: The Correlation Analysis
• [Analyze / correlate / bivariate / ok]
• Note: pearson correlation coefficient sample report: pls google search

Results: H0: NO relationship

Ha: relationship exit

Decision Rule:
Rujuk Sig. Value
Set alpha = 5%

If Sig Value < alpha:

result is significant. Therefore we reject HO

When we run analysis, refer to P or Sig. value row.

• ]The p-value for each term tests the null hypothesis; or to test whether or not the focused variable coefficient fits with the Ho hypothesis.
• A low P (or Sig.-) value < α5% (0.05) ; the results is considered Significant, and this provides indication to Reject the null hypothesis.
• Conversely, a larger P (or Sig.)-value than the alpha values(P-value > α* 5%) provides indication of an insignificant result, and therefore
hypothesis Ho is Accepted. In simple words, the results suggests; there is a correlation relationship between the dependent and the
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dependent variable.
Analysis 3: Regression test. [Demo SPSS]
[analyze / regression / linear regression / Key in dep. var: [gdp] / key in indep. var: [ms, inf] / ok

Note: Regression analysis sample report: pls google search

What to identify?
First: observe the Unstandardized vs Standardized Coefficient

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Unstandardized Regression Coefficients 
• 1. What are unstandardized regression coefficients?
• Unstandardized coefficients are those which are
produced by the linear regression model after its
training using the independent variables which are
measured in their original scales i.e, in the same
units in which we are taken the dataset from the
source to train the model.
• Unstandardized coefficient should not be used to
drop or rank predictors (aka independent variables)
as it does not eliminate the unit of measurement.
• For Example, let’s take a hypothetical example where
we want to predict the income(in rupees) of a person
based on its age (in years), height(in cm), and
weight(in kg). So, here inputs for our regression
model are age, height, and weight, and output is
income. Then,
Income(rupees)
=a0+a1*age(years)+a2*height(cm)+a3*weight(kg)+e        (eqn-1)
• How to interpret the unstandardized regression
coefficients?
• These are used to interpret the effect of each
independent variable on the outcome (response /
output). Their interpretation is straightforward and
intuitive.
• All other variables held constant, a shift of 1 unit in
Xi(predictors) implies there is an average change of
ai units in Y(outcome).
• In the above example, if a1=0.3, a2=0.2, and a3=0.4
(and assume all are statistically significant), then we
interpret these coefficients as :
• Getting 1 year older is associated with an increase of
0.3 in income, assuming other variables are constant
(means there is no change in height and weight).
• Similarly, we can interpret the coefficient for other
independent variables as well.
• It represents the amount by which dependent
variable changes if we change independent
variable by one unit keeping other independent
variables constant.
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 Standardized Regression Coefficients 
1. What are standardized regression coefficients?
• The standardized coefficients of regression are obtained by
training(or running) a linear regression model on the
standardized form of the variables.
• The standardized variables are calculated by subtracting
the mean and dividing by the standard deviation for each
observation, i.e. calculating the Z-score. It would make
mean 0 and standard deviation 1. Then, they don’t
represent their original scales since they have no unit.
• For each observation “j” of the variable X, we calculate the
z-score using the formula:
2.  Which variables we have to standardize for finding the
standardized regression coefficients i.e, both predictor and
response or either one of them?
Yes, we standardize both the dependent(response) and the
independent(predictor) variables before running the linear
regression model (as this is the widely accepted practice when
we want to find the standardized form of the variables).
3. How to interpret the standardized regression
coefficients?
The interpretation of standardized regression coefficients is non-
intuitive compared to their unstandardized versions:
A change of 1 standard deviation in X is associated with a
change of β standard deviations of Y.
Note:
If there is a categorical variable in place of a numerical variable in our
analysis, then its standardized coefficient cannot be interpreted as it
does not make sense to change X by 1 standard deviation. In general,
this is not a problem for our model since these coefficients are not
meant to be interpreted individually, but to be compared to one
another in order to get a sense of the importance of each variable in
the linear regression model.
The standardized coefficient is measured in units of standard
deviation. A beta value of 2.25 indicates that a change of one
standard deviation in the independent variable results in a 2.25
standard deviations increase in the dependent variable.
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Back to regression results:

What to do?
Focus on Standardized coefficient. Detect the β values for each explanatory variables (MS and INFr) and fit into model
specification; and detect status of Significance by referring to the Sig. or the P-values (compare with alpha 1% and 5%).
[ significant at 1%****, 5%**)

GDP = β0 + β1 MS + β2 INFr
GDP = 1.024 MS*** + 0.066 INFr***

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EXPLANATION:

Our model specification: Y = f (Xs)

Y = X1 + X2
GDP = β1 MS + β2 INFr

Results reporting for the CORRELATION AND THE REGRESSION ANALYSES is based on the
•Hypothesis derived from the established model specification
•Significance of results obtained (at given alpha of 1% to 5%) Ho: β1 = 0 (No relationship exist between the variables)
Ha: β1 ≠ 0 (Relationship exist between the variables)
Established Hypothesis (per β) :
Ho: βi = 0 (No relationship exist between the variables) Ho: β2 = 0 (No relationship exist between the variables)
Ha: βi ≠ 0 (Relationship exist between the variables) Ha: β2 ≠ 0 (Relationship exist between the variables)

When we run analysis, refer to P-value or Sig. value column.

•The p-value for each term tests the null hypothesis; or to test whether or not the focused variable coefficient fits with the Ho hypothesis.
•A low P-value < α1% or 5% ; the results is considered Significant, and this provide indication to Reject the null hypothesis.
•Conversely, a larger P-value than the alpha values(P-value > α*1% or 5%) provides indication of an insignificant result, and therefore
hypothesis Ho is Accepted. In simple words, the results suggests; changes in explanatory variables are not associated with changes in the
response (dependent) variable.

Summary
•If Pv < alpha (5% or 1%) : Reject Ho (Significant relationship between the observed variables)
•If Pv > alpha (5%) : Accept Ho (Insignificant relationship between the observed variables)

*α is the alpha value. In academic research, normally alpha (α) is set equals to 5% (0.05) or 1% (0.01). Alpha is the probability of rejecting
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the null hypothesis when it is true.
 REPORTING &
FORMAT
• COVER PAGE
• TOPIC
• Information of COURSE NAME AND CODE AND GROUP
• Names and Matric No. of Group Member
• Table Of Content
------------------------------------------------------------------------------------------
1. INTRODUCTION [4 marks]
• Define Title /or background of study
• Objective Statements Of The Study

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2. METHODOLOGY [10 marks]
[description on the data and the methods used to analyzed the data)

• Model specification
• Details of variables used, and type of data frequency.
• Details on the tests or analysis used for each objective
• Graphs – Excell
• Correlation test - SPSS
• Regression test – SPSS

3. FINDINGS OF THE STUDY [10 Marks]

• Graphical
• Correlation test (with hipothesis testing) – see explanation in the next slide.
• Regression test – see example in the next slide

4. CONCLUSION [4 Marks]
5. REFERENCES [2 Marks]

----------------------------------------------
*Note: length of paper – More than 5 pages

Due date: Sunday – week 13 – before 12 midnight . 14

 Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 1.861 .068 -  27.462 .000
MS .643 .013 1.024 51.206 .000
INF .005 .002 0.066 3.287 .003
a. Dependent Variable: GDP

  EQUATION FUNCTION: GDP = β1 MS + β2 INFr

GDP = 1.024MS* + 0.066 INF*

Report example for a regression test

The results obtained show that, GDP is positively associated with changes in MS and INFr. The magnitude of
change documented in this analysis is: a 1% change in MS resulted a 1.024% change in the GDP, while a 1%
change in INF, resulted a 0.066% in the GDP. The percents of change in GDP in response to 1% change in MS
is more than 1, which implies an elastic response while for changes in INF, the response in GDP is less than 1,
which gives indication that the GDP is relatively insensitive to change insensitif to changes in INF. The results
documented significant results in which the significant (or P)-values (in the last column) are all less than 0.05 (α
= 5%). 15
 RUBRIK PENILAIAN
(ASSESSMENT RUBRIC)
  SKOR PENILAIAN [ASSESSMENT SCORE]
BAHAGIAN
(ITEMS)         MARKAH JUMLAH
0 1 2 3 (TOTAL MARKS)
1 Penulisan Bahagian Kualiti penulisan bahagian ini Kualiti penulisan bahagian ini adalah Kualiti penulisan bahagian ini X/3 X [4]
INTRODUCTION Ini Tiada. adalah lemah. baik. adalah sangat baik.
 
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very good]
2. Penulisan Bahagian Kualiti penulisan bahagian ini Kualiti penulisan bahagian ini adalah Kualiti penulisan bahagian ini X/3 X [10]
METHODOLOGY Ini Tiada. adalah lemah. baik. adalah sangat baik.
 
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very good]
3 Penulisan Bahagian Kualiti penulisan bahagian ini Kualiti penulisan bahagian ini adalah Kualiti penulisan bahagian ini X/3 X [10]
RESULTS Ini Tiada. adalah lemah. baik. adalah sangat baik.
REPORTING
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very good]
4 Penulisan Bahagian Kualiti penulisan bahagian ini Kualiti penulisan bahagian ini adalah Kualiti penulisan bahagian ini X/3 X [4]
CONCLUSION Ini Tiada. adalah lemah. baik. adalah sangat baik.
 
[This part is missing] [Writing quality of this part is weak] [Writing quality of this part is good] [Writing quality of this part is
very good]
5 Penulisan Bahagian Kualiti penulisan bahagian ini Kualiti penulisan bahagian ini adalah Kualiti penulisan bahagian ini X/3 X [2]
REFERENCES Ini Tiada. adalah lemah. baik. adalah sangat baik.
 
[This part is missing] [Writing quality of this part is weak] [Writing quality of this part is good] [Writing quality of this part is
very good]
JUMLAH MARKAH KESELURUHAN XT / 30
OVERALL TOTAL MARKS

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INTEPRETING THE DATA AND REPORTING
Intepreting Line Graphs
• Line graphs – YouTube
• http
://explainwell.org/index.php/table-of-contents-handle-numbers/phrases-and-6-anal
ysis-steps-to-interpret-a-graph
/

How to interpret/report regression results:

• https://
www.slideshare.net/plummer48/reporting-a-single-linear-regression-in-apa?next_sl
ideshow=1

How to interpret/report Pearson Correlation Bivariate results:

• http://statistics-help-for-students.com/How_do_I_interpret_data_in_SPSS_for_Pear
sons_r_and_scatterplots.htm#.
YIIg-2czbIU
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THE END

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