The University of Manchester MGDI72162 Contemporary issues in development finance 2016/2017 ASSIGNMENT #1 (100% of final mark) The essay should be submitted via Blackboard before ... -------------------------------- WARNING:  The University has a strict policy on plagiarism. Unacknowledged copying of another person’s work will result in the automatic failure of the assignment and may lead to disciplinary action being taken against the study fellow. Your answer must be fully referenced where appropriate. For guidance on how to make sure you avoid plagiarism and other forms of academic malpractice, please consult your handbook. -------------------------------- Assignment Weight: 100% of the final mark 12pt font size, with 1.5 or double line spacing. Word limit: 3500 words essay (excluding references, tables, and abstract). Choose one of the following questions. Essay Question 1: Using data for 30 low income group countries and 30 middle/high income group countries investigate whether stock market development leads to an increase in economic growth. 1 (1) Your sample should cover the period 1970-2010 and should exclude the following industrialised countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, UK, US. (2) Your analysis should be conducted using basic statistical analysis: for example, using scatterplots (with a linear fit) and correlation analysis. 1 The data can be downloaded a from the World Bank’s World Development Indicators or the Global Financial Development Database. 1 (3) Carefully interpret each bit of empirical evidence you present. Notes: For the scatter plot, although STATA is strongly recommended, you are allowed to use other software packages if you wish to do so. The only requirement is that in your scatterplot the country identifier should be visible.2 Essay Question 2: Financial development has an impact on how income is distributed in the economy. While many would agree with this idea, it is still controversial whether its effect relieves or exacerbates inequality and whether it is significant. Using one or more proxies for financial sector development (obtained from the World Bank’s Global Financial Development Database) and data on income inequality (e..g., from the World Income Inequality Database, University of Texas Inequality Project, World Wealth and Income Database, World Development Indicators), discuss whether the above idea is empirically valid. For your analysis, you should: a) Choose a sample of at least 45 countries, composed of 10 OECD countries and the remainder of developing/transition economies. b) The analysis should be conducted using a range of statistical approaches, which may include a selection of descriptive statistics, scatter plots, and regression analysis. c) Carefully interpret each bit of empirical evidence you present. Suggested essay structure: o Introduction A brief survey of the related theoretical and empirical literature (hint: you should be keep this part very focussed, otherwise you will have no space left for the empirical analysis and interpretation of the results) o Description of the data and methodology o Analysis of the data o Conclusion o Appendix o References 2 For the scatter plot and correlation analysis some Stata commands are posted on blackboard. 2