business forecasting and data analysis
Project description
Only one method of submission will be accepted – by handing in with the appropriate form to the Undergraduate Centre in Richmond Building before 16:00 on Friday 26 April 2013. As well as providing a written version of your assignment, you should also submit a copy of your work in electronic form, to include all relevant EViews computer output, on a CD.
Working must be on an individual basis. Plagiarism through ‘borrowing’ of files from others is a disciplinary offence. Similarly, you should not ‘lend’ your work to others, or you may be accused of plagiarism yourself. As stated in the unit outline, this assignment counts for 50% of the marks in this unit.
Guideline for length of submission: maximum 2000 words excluding graphs and tables and any appendices.
The Software
EViews is the required software for undertaking this assignment.
Background
One of the Bank of England’s two core purposes is monetary stability. Monetary stability means stable prices – low inflation – and confidence in the currency. Stable prices are defined by the Government’s inflation target, which the Bank seeks to meet through the decisions taken by the Monetary Policy Committee. A principal objective of any central bank is to safeguard the value of the currency in terms of what it will purchase. Rising prices – inflation – reduces the value of money. Monetary policy is directed to achieving this objective and providing a framework for non-inflationary economic growth. As in most other developed countries, monetary policy usually operates in the UK through influencing the price at which money is lent – the interest rate. However, in March 2009 the Bank’s Monetary Policy Committee announced that in addition to setting Bank Rate, it would start to inject money directly into the economy by purchasing assets – often known as quantitative easing. This means that the instrument of monetary policy shifts towards the quantity of money provided rather than the price at which the Bank lends or borrows money. Low inflation is not an end in itself. It is however an important factor in helping to encourage long-term stability in the economy. Price stability is a precondition for achieving a wider economic goal of sustainable growth and employment. High inflation can be damaging to the functioning of the economy. Low inflation can help to foster sustainable long-term economic growth.
Further Reading
http://www.bankofengland.co.uk/monetarypolicy/Pages/default.aspx
The data
The data consist of quarterly observations for the UK economy over the period 1992Q2-2012Q4. Names and definitions of variables are given below.
You can download the data for the UK economy directly into EViews by downloading the file from the web location: http://snellm.myweb.port.ac.uk/bfda/sites/bfda/files/uk_data.wf1. (Note that this is already an EViews workfile).
The variables available to you are described below.
Name Description U Unemployment rate (percentage) IR Central Bank Policy Interest Rate M4 Money supply, millions of £s (Seasonally Adjusted)
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