For an
analysis of growth within or across countries the Augmented Solow model
developed by Mankiw et al (1992) is capable of incorporatingfactors such as trade
FDI inequality and a measure of institutional quality in addition to the core
variables of capital and labour etc.A: Select one
additional non-core variable and a country (or countries) of your choice and
set up your empirical model for investigating potential impact that the
variable may have on growth for the country/countries you have selected. Provide a theoretical and empirical
justification for the inclusion of the selected variable. 10%B: Using the
World Bank World Development Indicators (WDI) download relevant time series
data for your model; make use of other internationally reputable sources to
complement your dataset if data are not available in the WDI. Conduct a preliminary analysis of your data
using relevant descriptive statistics techniques. 10%C: Run
relevant regressions using Microfit. Present the output of your regression comment
on the regression results generated and discuss their theoretical and empirical
validity. 20%D: Discuss
the main problems that you may face conducting regression analysis (other than
non-stationarity) and by reference to your regression results discuss whether
they suffer from any of these problems. Make
use of relevant diagnostic tests whenever appropriate. 20%E: Identify
whether the variables in your model suffer from non-stationarity. Discuss the possible implication of
non-stationarity for your model and how this problem could be addressed. 20%
F: In the light of your findings under D and E
above make any necessary changes to your model to correct for any of the
problems that you have identified.
Compare and contrast results generated here with those under C. To what extent are you confident about the
reliability of your result? What are the
policy implications from this analysis?