Methodology

3.0 Methodology

This assignment shows that 3 macroeconomic variables relationship and their influence on purchasing power parity.  To estimate the coefficients of the independent variables and also to test the hypotheses, regression modelling technique has been used.  A part from that, this assignment also used article to support the use of macroeconomic variables and their relationship in theoretical model.

3.1 Data sets

In order to determine the right relationship between the dependent variable and independent variables, we have run through a few set of data and the final decision is to use purchasing power parities (imports of goods and services) as dependent variables.  As for independent variables, we are using exchange rate, tax on goods and services and average wages (services, etc, merchandise trade and revenue, excluding grants).  But after running the regression by using Microsoft Excel the only independent variables that remain in used is tax on goods and services and exchange rate (services, etc and merchandise trade)  because of multi-collinearity and low p value.

3.2 Research design and technique

Exploratory research design, explanatory and descriptive research design are the main type of research design.  In this assignment, we are using exploratory research design where the variable are recognized and also study the relationship between dependent variable and independent variable.  Besides that, this assignment also used quantitative method where the data are based on purchasing power parities, exchange rate, tax on goods and services and average wage from 1994 to 2013. ( imports of goods and services, services, etc, merchandise trade and revenue, excluding grants from 1995-2010)

3.3 Data Analysis

In this assignment, the data that been gather are been analysis by using the application of statistic soft which is Microsoft Excel by using the feature which is data analysis to calculate the regression and identify p value before using the data.  It assists us in concluding the result of the entire assignment with statistic data from the data analysis.

3.4 Data Collection Sources

There are two types of data which is primary data and secondary data.  In this assignment, we are using secondary data where most of the data are collect from internet sources. i.e: OECD.org （worldbank.org）