Dissertation Proposal

1339 WordsFeb 4, 20116 Pages
Introduction Development of an individual economy passes through different economic phases. Sometimes it is booming and sometimes it suffers from recession. This phenomenon can be viewed as projection of consumption and investment strategies of the individuals and the government of the country. Interest rate, being a major factor of economics, plays a great role in economic activities carried out by nation and the nationalities. A change in interest rates may affect other factors of the economy. For instance, investment strategies of the investors, consumption strategies of the individuals, foreign exchange, imports, exports etc. are affected by the interest rates. An increase in interest rates may decrease the investment, decrease the…show more content…
Individuals spend more today when they expectation to earn more in future for a longer time. This means individuals’ consumption pattern is determined by their permanent income not by their current income and the permanent income is determined by the permanent asset. Robert Hall (1978), ‘Random walk model of consumption’ explains that the consumption is unpredictable since it only changes when there is surprising news about the income. GDP, an indicator of prosperity of the economy, is also determined by the imports and exports. Imports and exports are influenced by the exchange rates and the interest rate causes fluctuation in the exchange rates. When the exchange rate appreciates or depreciates, the relative prices of imports and exports change; biz/ed (n.d.). This means interest rate has a significant influence in the imports and exports. Methodology: There are several factors that limit for the exhaustive data collection as required for the quantitative analysis. However, this research will be based on the analysis of secondary data on the basis of relevant theoretical support. In this respect the aim of the dissertation will be addressed through desk research. The desk research will begin with text books related to the macroeconomics and financial management and the statistics to identify the related theories. In addition, articles in
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